New Study Demonstrates that Only 1 in 10 attempts by “Debt Settlement Companies” Prove Successful. http://nacba.org/News/ConsumerAlertDebtSettlement.aspx
In many cases, we often advise clients that even if your circumstances are such that the Bankruptcy Code requires that you repay some or all of your debts via a Chapter 13 Bankruptcy repayment plan, our clients are better off. In such a case, they have the ability to propose to pay what is affordable to them and the additional benefits of the protections of the bankruptcy code. For example, when you file a bankruptcy case, you receive the protection of the automatic stay – meaning your creditors cannot contact you or initiate or continue lawsuits and other legal proceedings for collection.
Many of people who are looking at “Debt Settlement Companies”, greatly misunderstand them – often due to misrepresentations from companies in states like Florida, Nevada and California. We have represented many clients who have made more than their best efforts to repay their debts through these “debt settlements” only to find that they have not been given full and accurate information.
While they are honestly paying the “debt settlement company”, they are sued or pursued for wage garnishment or bank levy – only to learn that the “debt settlement company” will do nothing to stop it. Also, for those who have debts which are not typically included in “debt consolidation” (i.e. medical bills, etc.), they are left with little or no recourse.
The best advice we can give is that when you are faced with serious debt problems, consult with an experienced attorney to learn your rights and decide what is your best option.