Debt settlement sure sounds good when you are getting collection calls. Imagine, you can make much smaller payments to a debt settlement company and they will help you pay cents on the dollar and avoid judgments. This is the pitch, but if you fall for it, you will really feel the sting! (more…)
Credit and Debt Blog
A Service of Debtors Unite, Inc.
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Archive for the ‘Debt Settlement’ Category
Stimulus Payments Trigger Debt Settlements
The economic stimulus payments received by households in 2008 is intended to increase consumer spending. It was designed to soften the recessionary pressures caused by the credit crunch.
Many consumers, however are using it to catch up on late bills. Debt collectors are finding that many consumers are receiving substantial stimulus payments, which could be used as a lump sum payment to settle an old debt. (more…)
Debt Settlement Companies Do Not Stop Legal Action
Many unsuspecting debtors flock to debt settlement companies because they offer the lowest payment available for a debt relief program (excluding bankruptcy). However, a high number of debt settlement company clients find that the settlement company offers very little benefit at a very high cost. Worst yet, there are no protections from legal action. (more…)
The Consumer Law Center Blocked in North Carolina
Wake Superior Court Judge Donald Stephens signed the order to block The Consumer Law Center and Hess-Kennedy Chartered LLC from providing debt settlement services in North Carolina. According to Attorney General Roy Cooper, clients were often left in worse shape than when they first sought help. (more…)
How to Select a Debt Settlement Company
DON’T!
That should just about sum it up. Debt settlement companies:
- Cannot reduce the debt lower than you can negotiate
- Cannot help you avoid legal action such as judgment and garnishment
- Charge you monthly fees of $35 or more
- Charge you a percentage of the savings
- Fail to disclose potential taxes on forgiven debt that you will owe
- Have a dismal success rate
- Have horrible ratings with the Better Business Bureau, with only a few exceptions
- Are mostly for-profit corporations
What is a 1099-C?
If you have ever settled a debt, you may have received an unwelcome surprise. Anytime you save $600 or more on a debt balance by negotiating a settlement, the debt collector is required to issue a 1099-C form and report the information to the Internal Revenue Service.
So what exactly is a 1099-C form? In short, it is a declaration that the debt collector provided you with income to pay your debt. And now Uncle Sam and possibly your own state revenue department expect you to pay taxes on that income. (more…)
More Bad News for Debt Settlement
This month, numerous debt settlement operations received restraining orders from the Federal Trade Commission. They cited The Debt Settlement Company, The Debt Elimination Center, Money Helps, Edge Solutions, and Pay Help, Inc. All of these companies marketed debt relief through the Debt Meltdown Program. These were operated by Miriam and Robert Lovinger.
This is not the first time the federal government has worked to shut down debt settlement companies that misrepresent the value of the services that they can provide. What is remarkable is that these failed programs are no different than most other debt settlement companies! (more…)
Debt Settlement Nightmare
If you have experienced calls from debt collectors, you know how frustrating and embarrassing these calls can be. They come morning, afternoon and evening seven days a week. Not even Sunday is a day of rest for debt collectors.
Many debt collectors routinely will reveal information about your debt to employers, neighbors, relatives and family members. Their purpose is to embarrass you to the point that you will do anything to pay that debt off. (more…)
