While legitimate debt settlement and debt consolidation firms can be among the most effective tools available to consumers looking to escape a tight financial spot, the Better Business Bureau warns that there are also less-trustworthy operators in the marketplace.
Stephen Cox, president of the Council of Better Business Bureaus, said that "the process doesn’t work for many consumers, it has potentially serious negative consequences, and should primarily be used as a last-ditch effort to stave off bankruptcy." Any firm promising a quick and easy fix to serious financial issues should be viewed with a great deal of suspicion.
The BBB says that it has received more than 3,500 complaints, emanating from every state in the union, which allege misleading or fraudulent practices on behalf of rogue debt settlement companies. One of the most frequently seen complaints said that such companies took large up-front fees and provided little, if any, help.
Legitimate debt consolidators are also damaged by these fly-by-night operators, experts say, and some consumers could be driven away from the industry as a whole if they erroneously believe all such companies are illegitimate.