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Consumers should approach debt settlement cautiously while paying attention to what companies claim to offer
02/01/2010
Some consumers may consider debt settlement as a way to handle an unwieldy personal financial situation.
However, personal finance expert Liz Pulliam Weston noted there are some things consumers should pay attention to when it comes to considering debt settlement companies. There are a number of "warning signs" that should tip off consumers that they may be dealing with a company that could try to scam them.
For example, if the company claims that there is a federal program or law that allows people to reduce their debt "legally," consumers should probably avoid them.
"There's no such animal," Pulliam Weston wrote.
Furthermore, any company that claims that debt settlement won't affect a credit score is probably trying to sell consumers a line. Debt settlement can, in fact, lower a person's credit score because it is considered a partial payment.
Some companies may also claim to have been featured on networks like CNN, however, any link to such a story ends up going to yet another advertisement for debt settlement.
Pulliam Weston is not the only one who has expressed concerns about debt settlement. Recently, Illinois Attorney General Lisa Madigan put forward legislation that would further regulate such companies in the state.
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