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Madigan warns against debt settlement
By Marvin Milner on Mar 30th, 2010
Consumers who are looking for some solution to their credit card problems may turn to a debt settlement company.
However, a recent report from CBSNews.com notes that some debt settlement companies may actually leave their customers in worse shape than when they began. Advocates have noted in the past that some of these companies may charge a high fee up front, and then leave the consumer hanging.
Illinois Attorney General Lisa Madigan told the news organization that debt settlement companies on the whole are targeting consumers who are in desperate financial situations.
"You would be more likely to settle your debt by buying a lottery ticket than by signing up with a debt settlement company," Madigan said.
In order to help regulate the debt settlement industry in her state, Madigan has crafted legislation that would prevent debt settlement companies from asking for up-front fees. Also, debt settlement companies that want to operate in the state would have to get a license.
The CBS report noted that consumers may have other options rather than going to a debt settlement company. Cardholders may try to negotiate directly with their creditors or seek the assistance of consumer credit counseling services.
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