CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Why Debt Settlement Doesn’t Work

BillsWhat is Debt Settlement?

Debt settlement can seem like a very appealing option when you are struggling to meet your financial obligations. It’s not as drastic as bankruptcy and it lets you off the hook for the insurmountable amount you owe.

It’s as if it’s too good to be true.

And this is because it often is just that. Rarely do debt settlement companies deliver on their promises and you’re stuck in a worse position than if you’d done nothing or if you’d filed for bankruptcy.

Debt Settlement Companies Promise Relief that Never Comes

Unfortunately, there are far too many people out there scared of what comes next when they are facing financial problems. They get calls daily from aggressive debt collectors, they might be served with a lawsuit, and their credit is an abysmal mess. Wage garnishment or levied bank accounts or foreclosure could be in their future.

Then in walks a debt settlement company offering to make it all better when in reality, their problems are only going to get worse.

The truth is that most debt settlement opportunities fail to offer a debt-free life and they result in credit that is damaged more than it would have been in bankruptcy. In many cases, the person dealing with debt problems ends up filing for bankruptcy anyway, but from a much worse place than had they opted for that in the first place. Some aren’t even able to afford bankruptcy because of what debt settlement costs them.

So why do people see debt settlement as such an appealing option when it’s most often a mistake? There are several reasons:

  • It relieves them of the emotional burden tied to debt. You’re paying someone to take care of your debt issues for you so you don’t need to worry about them any more (except you will need to worry and your worries will be even worse).
  • It offers a “less frightening option” to those who are afraid of bankruptcy. Filing for bankruptcy is seen as a last resort and comes with a great deal of perceived judgment. So-called financial experts badmouth bankruptcy and many people don’t view it as a viable option for fixing a problem, so they choose debt settlement instead.
  • Debt settlement companies make it seem alluring with well-crafted sales pitches that create a sense of magic and the sense you are getting away with something without breaking the law or creating any long-term consequences.
  • It doesn’t seem like the cop-out that some people see bankruptcy as. Settling their debt allows them to pay some of what they owe, as opposed to bankruptcy where your debts are discharged. They just feel morally wrong for not paying anything on a debt that is rightfully their own.

Unfortunately, and regardless of how noble it might be to attempt to resolve debt through a settlement, you are not working with someone who has your best interest in mind. Debt settlement companies are in the business of making money and they make sure they get theirs first. This means that much of what you pay them to supposedly settle on your debt doesn’t even go to your creditors – it stays in the settlement company’s pocket.

You can read more about how the debt settlement process works in this article from The Balance.

Debt Settlement Programs Can Worsen Your Financial Situation

You could pay a debt settlement company for months without ever seeing any benefit. You’ll be in worse financial shape and it could be even more difficult for you to file for bankruptcy. Instead of saving your filing fee, you’ll be paying the debt settlement company to do very little, if anything, for you.

Even if you believe bankruptcy isn’t the right option for you and you’d like to explore debt settlement, it’s important to look at all of your choices. Make sure you understand the truth about your bankruptcy and debt relief options and that you are making the best decision based on your specific circumstances.

To learn more about bankruptcy or debt settlement or to speak to someone about your financial situation, contact the Bankruptcy Law Office of Robert M. Geller at (813) 254-5696.

Archive

Tampa Bankruptcy Law Blog

How Will Filing for Bankruptcy Affect My Credit?

Will Bankruptcy Affect My Credit? Not paying your bills affects your credit negatively. And yet problems with credit are one...
Read More

Behind or In Default on Your Student Loan? Here’s What You Should Know

Student Loan Default If you’ve fallen behind on student loan payments or your student loans are in default, you aren’t...
Read More

Will Bankrutcy Affect My Job? Learn How Filing Affects You in the Workplace

Will Bankruptcy Affect My Job? Filing for bankruptcy raises many considerations. One of the most important is whether or not...
Read More

Can Bankruptcy Help Me If I’m Behind on Child Support?

Bankruptcy and Child Support Bankruptcy can help you with a lot of things. It can help you stop calls from...
Read More

Can You File for Bankruptcy When You’re Unemployed?

Bankruptcy and Unemployment Being in debt is bad enough, but if you’ve lost your job recently or accumulated debt because...
Read More

Bankruptcy and Eviction History

Eviction With the rate of evictions on the rise in recent months and the expectations that eviction numbers will grow,...
Read More

What to Expect Once You’ve Decided to File Bankruptcy from Home

File Bankruptcy from Home There are a few things that happen when you file bankruptcy from home. An automatic stay...
Read More

Will Filing for Bankruptcy Affect My Job Search? What You Need to Know about Unemployment and Bankruptcy

Unemployment and Bankruptcy Searching for a job when you are faced with a dire financial situation is difficult. If you’ve...
Read More

Will I Need to Go to Court If I File for Bankruptcy?

File for Bankruptcy from Home One of the most intimidating aspects of filing for bankruptcy is meeting in person with...
Read More

COVID-19 and Debt – 5 Ways the Pandemic is Leading More People to Bankruptcy

COVID-19 Debt If you’re considering bankruptcy you aren’t alone. The last few months of 2020 have brought a great deal...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

NACBA Logo comodo avvo1 avvo2 avvo3 LEA BBB Logo RG Seal

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions