Today, large amounts of debt are facing many Americans. Because of this, many debt settlement companies have popped up. They are promising consumers ways to get out of their debt in a relatively short amount of time. And, for less money than they actually owe. However, despite all their TV and radio advertisements, the industry admits that the debt settlement companies’ schemes fail to work for about two-thirds of clients.
According to the FTC and state attorneys general, it is actually less than 10% of consumers who successfully complete these programs. And, who have their debts reduced. Additionally, even for the “successful” consumers, there is often a high price. The companies typically charge large up-front fees. They also charge a monthly payment and a percentage of the money they “saved” the consumer at the end. Also, the IRS considers income the amount that the customer’s debt is reduced. Thus, it is taxable unless the consumer is considered insolvent. The article suggests checking for a government-approved credit counseling organization that is non-profit. Or, meeting with a bankruptcy attorney to further discuss the available options.
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