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Montana AG: Consumers should be careful when considering debt settlement
01/26/2010
When dealing with debt difficulties, consumers may consider a variety of solutions, which may include debt settlement.
However, a recent report from Montana's Missoulian newspaper noted that the state's attorney general is trying to make consumers aware of what exactly goes into a debt settlement program. Steve Bullock said that some consumers may find that a debt settlement may get them into more trouble than they are already in.
"Consumers think they're buying protection and peace of mind from these companies but they're often getting neither," Bullock told the paper.
The paper noted that companies that offer debt settlement may tell consumers to not pay off their debts. Instead, the companies wait for the debt to be turned over to a credit collection agency, which is when the debt settlement company will begin negotiations.
Bullock said that one of the problems is that debt settlement doesn't protect consumers from being sued by their creditors. Furthermore, if the debt settlement company can't deliver on its promises, it could leave the consumer even further in debt.
Some alternatives that consumers may consider are debt consolidation or consumer credit counseling services. Debt consolidation may help lower interest payments, and credit counselors can help consumers develop a prudent spending plan.
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