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Debt settlement commercials rarely tell the full story

South Carolina residents who are struggling to cope financially sometimes see bankruptcy as an option of last resort, but pursuing alternative forms of debt relief may sometimes make their situations worse rather than better. Debt settlement companies often market themselves aggressively, but their commercials rarely reveal how their services actually work.

Many people with unmanageable debt put off filing for personal bankruptcy because they worry that their credit ratings will be irreparably harmed, but debt settlement may have an even more negative impact on credit scores. Debt settlement companies usually advise their clients to cease making their regular monthly payments so they can put aside enough money to make a lump sum offer to their creditors, but this causes their balances to be inflated by late fees, penalties and additional interest and can have a ruinous impact on their credit ratings.

Another problem with debt settlement is that debtors must endure sometimes daily harassment from their creditors as they strive to save enough to make them an offer, but they have no guarantee whatsoever that the offers they make will be accepted. Debt settlement also does nothing to stop creditors from seeking payment by filing lawsuits. A 2014 report revealed that the average debt settlement company client owes more than $30,000, and litigation is not out of the question with debts of this size.

While filing for bankruptcy may not be the best option in every situation, taking this path does prevent creditors from initiating litigation and puts an immediate end to harassment. Attorneys have a fiduciary duty to their clients, and they could explain the merits and drawbacks of bankruptcy, debt settlement and credit counseling in an open and candid manner.

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The Huggins Law Firm, PA

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1812 Lincoln Street
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Columbia, SC 29201

Phone: 803-764-1558
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