Desperate to not be deadbeats, hundreds of thousands of consumers are turning to debt settlement agencies to escape crushing piles of bills. Everyone has seen the ads: you call, they help, and eventually you are a debt free. But a report in today's New York Times says many consumers have begun to complain that those companies collect large fees and don't do much to help. Unfortunately, it seems the typical experience according to consumers is that a settlement company collects a large fee, often 15 percent of the total debt, and accomplishes little or nothing on the consumer’s behalf. Needless to say, state attorneys general are being flooded with complaints about settlement companies. The Takeaway talks with New York Times business reporter David Streitfeld for more on the story.
"A lot of the people in the debt settlement industry are former workers in the mortgage industry, who probably sold you the mortgage for your house that cost too much money to begin with." —New York Times business reporter David Streitfeld on debt consultants