Potential Client X sent an email to me today advising that she was in trouble.  She has several credit cards in default, so she hired a debt settlement company to assist her. (This is always a HUGE mistake as all debt settlement companies are either scams or not worth the exhorbitant fees that you pay them). The company is charging her 20% of her outstanding debt and have asked her to make monthly payments of $500 into their account. Because her total debt is about $40000, their fee is going to be $8000!  (I wish that I could charge that much, but my conscience doesn’t allow me to do that).  The best part (maybe the worst part) is that the company gets its money first.  The first 16 monthly payments go to the settlement company before they do any work.  Isn’t that just great!  Of course, all of the credit card companies are going to wait this out until the company gets its fee, right? 

The sad part, if it could get any sadder, is that the company told potential Client X that the credit card companies would not sue her because they were involved now. They mentioned that if a lawsuit did come, that they would take care of it.

Well, the lawsuit from Citibank did arrive. Potential Client X notified the company and they advised her that they would handle it.  They advised her to send an extra $125 per month to make payments to Citibank.  Potential Client X complied, only to find that while the funds did go to Citibank, the debt settlement company did not respond to the lawsuit and a judgment was entered against her for the full amount plus attorney fees. They told her that they thought Citibank would like to have 6 months of payments and then they would review her case, because ” that’s how they have handled things in the past”.

This entire fiasco could have been averted if Potential Client X had contact my office, or the office of another consumer attorney, rather than the debt settlement company.  Moral of the story, all debt settlement companies are a waste of your time and money.

Even if they get a reduction of 40%