Tag Archives: debt settlement

Financial Distress is a Daily Challenge for Millions of Americans

A recent study conducted and published by Urban Institute found that an estimated one in three adults in the United States have at least one delinquent debt that is “in collections.” The study was also featured on CNN Money (link). The study included many different kind of debts such as credit card bills, medical bills, car loans, parking tickets, but specifically did not examine mortgage debt. It is a stark reminder that millions of Americans are in financial distress. The consequences of having delinquent debts in collections can result in collection phone calls, lawsuits, wage garnishments, employment issues, restricted access to mortgages, and potentially increased insurance costs. Additionally, financial distress often creates stress and pressure on a person’s relationships. Another consequence of delinquent debts and collection actions is the feeling or loss of control over one’s financial life. High interest rates, late and collection fees can cause bills to grow…
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Debt Settlement Company Pleads Guilty to Fraud

We came across this Reuters headline discussing a debt settlement company that was referred to federal prosecutors by the Consumer Financial Protection Bureau (CFPB) pleading guilty to multiple charges, including wire fraud. Mission Settlement Agency scammed more than 1,200 people across the country from 2009-2013. The CFPB, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, referred the company to a U.S. Attorney’s Office. The debt settlement company claimed it could help customers reduce credit cards and other debts. However, the company instead charged high fees and failed to help its clients. The operators of the debt settlement company have agreed to forfeit $2.2 million dollars as a part of the guilty plea and the debt settlement company faces an addition fine of up to $4.39 million dollars. The take away from this is that there are lots of so called debt settlement and debt consolidation…
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Debt Settlement Companies May Leave Clients Worse Off

The New York Times recently posted an article referencing a report from the Center for Responsible Lending, a nonprofit research group, that found consumers that worked with for-profit debt settlement companies had their debts grow by about 20% on average before a settlement was reached, with no guarantees that a settlement would be reached! We have discussed in the past the potential pitfalls and scams that some debt settlement companies engage in, promising to reduce debt and interest rates by negotiating with creditors on behalf of clients. The truth is, debt settlement companies have very little leverage over creditors. During negotiations, debts will continue to grow and accrue interest, 20% on average, and if negotiations fall through or they decide not to make any changes, its quite possible someone could find himself or herself out the money they spent on debt settlement services and higher debt bills than when they…
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