There’s no doubt in anyone’s mind that choosing between different debt settlement companies can be a tricky task but it must be done and with care. So I decided to put this list together for you. It’s a checklist of simple mistakes people make all the time when choosing a company to help them settle their debts. Each “mistake” also provides a simple set of instructions that will help you make the best decision possible.
So let’s get started.
“Failing to Check that the Debt Settlement Company is Licensed and Bonded by the Connecticut Department of Banking”
Due to the torrent of complaints filed with the Federal Trade Commission, State Banking Departments, and Attorney General Office in all 50 states, legislation has been enacted to stop the SCAM, FRAUD, AND DISHONESTY of Debt Settlement Companies.
Connecticut requires that a Debt Settlement Company be licensed and bonded with the Connecticut Department of Banking. How can you check to determine if the company is licensed and bonded with the Conn. Depart of Banking?
Answer: It’s simple. Go to the Internet and search the following, ‘Connecticut Department of Banking’. Or you can search under www.ct.gov/dob which is the URL for the Connecticut Depart. Of Banking.
Next, on the left side of the screen, you’ll see: Verify a License. Click on this. Then go to Debt Negotiation and click on this. In the center of the page you’ll read: Downloadable Debt Negotiation Licensee List as of November 20, 2012.
Click on this. And you’ll be taken to an Excel spreadsheet.
In that spreadsheet you will see 8 companies listed as follows:
Now if you need help you can call the Connecticut Department of Banking at 800-831-7225 and you should ask to speak to the Consumer Credit Division and proceed to ask your questions.
Most Debt Settlement Companies are located out-of-state especially in the ‘sand states’, California, Texas and especially Florida.
Just one major complaint against them is that they charge very high fees and all your initial payments go to their fees which usually take a year to pay.
At the end of the year, most people are sued in Court because they aren’t actually making payments on their debts and in the end, they have to file for bankruptcy.
Meanwhile, the $3,000 – $5,000 in fees won’t be refunded. And only 10% of the Debt Settlement Plans are ever completed!
The scam artists know this. And big money is involved in the ‘racket’ or scam. People will be paying $250-$416 per month for 12 months in order to pay their debt settlement fees. This is definitely not what most people expect to encounter when paying off their debts.
Their fee comes off the top and is non-refundable. How much money does this represent to the Debt Settlement Company. There are Debt Settlement Companies with 5,000- 10,000 enrollees. Therefore, multiple $250 per month x 10,000 enrollees =$2,500,000! That’s right. Do the math.
But then you multiple $2,500,000 per month in fees x 12 months =$30,000,000. Read the number again. That’s 30 million dollars for the year. Now, let’s say the Debt Settlement Company had 5,000 enrollees. (And let’s say that their average fee is $3,500 which would be $291.66 per month x 12 months=$3,500 x 5,000 enrollees=$17,500,000! And all of these fees is ‘pure gravy’ because only 10% of the enrollees complete their debt settlement plans.
The reason the Debt Settlement Companies do not want to be licensed and bonded by the Connecticut Banking Department is because if they conduct themselves improperly which is 90% of the time, then if you want to have recourse or redress against them, you have to sue them in California, Texas or Florida which is a practical impossibility.
But if they have posted a bond in Connecticut, you can sue the bonding company in Connecticut and obtain legal jurisdiction over them. And this, they don’t want. And most of their agreements or contracts indicate that you have waived your rights to bring a law suit against them or class action.
“You Fail to Conduct a Simple Internet Search on the Company”
A simple search would be the following: enter the company’s name followed by the words, ‘scam, fraud’ ‘complaint’ and then press ‘enter’.
Most people don’t think to do this type of simple search, namely, enter the name of the company followed by ‘scam, fraud, complaint’, ‘ABC Debt Settlement Company Scam, fraud, complaint’ and you will be astonished at the results!
Now you could think, ‘Well, if they are licensed and bonded by the Connecticut Department of Banking, they must be a fine company”. DON’T BE SO FOOLISH. Checking with the Banking Department is only STEP #1.
Of the 8 companies listed as Debt Negotiators on the CT Banking Department’s website, 5 are Real Estate Agencies and they could be involved in Short-Sales of Real Estate and since they are negotiating debt, could be considered a ‘Debt Negotiator’.
One company is a financial services company. 6 companies have offices in Connecticut. 2 companies are located out-of-state and have no in-state office. And one of the two out-of-state companies is located in one of the ‘sand states’ namely, Florida. And remember what I said about the ‘sand states’ in Mistake #1?
And be aware: Debt Settlement Companies would list themselves with the Better Business Bureau. And at first, they will have no complaints because they are brand new. But once the complaints start to pile up, then they simply change their name and register with the Better Business Bureau under a new name.
The Better Business Bureau has insisted that when they list a Debt Settlement company, they will always puts a warning about Debt Settlement services along with the company’s name.
They have squealed like stuck pigs because the BBB has branded them automatically as suspicious and dangerous and that’s because they have had so many complaints from consumers about debt settlement companies providing bunk services.
Please check out all the complaints to the BBB about debt settlement companies – you will be slightly shocked and thankful that you’ve found this article.
You can do a simple search for ‘Better Business Bureau Debt Settlement’ and see what you find.
I highly recommend that you search all of the company names with the words ‘fraud, scam and complaint’ after their names.
It is raining and pouring ‘fraud’ with debt settlement companies. And this is a shame because debt settlement is a valid and viable option in dealing with debt when it has been professionally analyzed and evaluated as one of your options.
And like anything, an aspirin can be good for you but not if you swallow the whole bottle.
“You Fail to do a Simple Check of the Terms for the Debt Settlement Agreement”
Under Connecticut law a Debt Negotiator can only charge the following:
“You Fail to do a Search of the Company on the Website Rip Off Report“
You can go to RipOffReport.com and simply search for the company name and see what you find.
Again, you’ll be amazed. I call this website, ‘The Wild West’ because there are ‘no holds barred’ and the owner is willing to be sued.
But where there’s ‘smoke there’s fire’ and most of the time, I have to agree with the consumer who write complaints. I admit that the site is ‘over the top’ because a very good company could be libeled but the company can respond and defend itself.
“You Fail to realize that the Federal Trade Commission (FTC) has jurisdiction over Debt Settlement Companies”
This is a mistake of not obtaining any background information on a debt settlement company. If you were moving to a new neighborhood, you would want background information on the neighborhood. I highly recommend that you check out the neighborhood by reading up on an Federal Trade Commission’s resource entitled debt relief service and credit repair scams. You can also just use their search box, simply type, ‘Debt Settlement’.
You’ll literally have your socks blown off your feet with this background information. And this site is very conservative in its presentation and information.
“You are afraid of filing bankruptcy, so you want a quick and easy solution and you want a solution that is ‘too good to be true’”
No one graduates from High School or College and stands on the graduation stage and screams, ‘Oh, boy, I’m going to file for bankruptcy’. The word bankruptcy is a ‘painful’ and psychologically, a very difficult word.
And, therefore, in order to avoid the ‘pain’ and ‘embarrassment’, you naturally seek a solution other than bankruptcy.
No one wants to go to the hospital even for the blessed event of having a child and no one wants to file for bankruptcy. But why do people go to a hospital? And why do people file for bankruptcy protection?
This mistake involves you failing to confront your fears and have a professional evaluation to determine between the benefits and negatives of debt settlement versus bankruptcy.
Scam artists prey on this typical human tendency to avoid what is perceived as ‘painful’. And they offer you solutions which are too good to be real. But understandably you want to believe them. And so you believe them. And you potentially set yourself up to waste thousands of precious dollars.
The mistake is not conducting a systematic and impartial search, comparison and weighing in of the options. What will be the monthly payments? What will be the total cost for all options? What will it cost for Debt Settlement? What will it cost for bankruptcy? What are the negatives for each option? What are the positives for each option?
I highly recommend that you review our entire website especially under the pull-down menu under ‘Debt Consolidation‘, ‘Options Comparison Chart’ and under ‘Debt Options Analyzer’. And you should, also, go to our website Action Advocacy PC, and review your options when it comes to bankruptcy, with a dispassionate approach.
Check out the following video I put together where I do answer some questions about options besides bankruptcy.
We specialize in non-bankruptcy options and bankruptcy options and both require that an experienced attorney help you weigh the options. With an experiences attorney on your site, you can rest assured all laws will be followed when it comes to dealing with your case.
“Failure to have a local office”
When a business has a local office and you feel that you have been cheated, you can go to that office and point your finger in the face of the person in charge and scream, “You cheated me!” By not having a local office, out-of-state debt settlement companies can avoid this type of confrontation.
Without a physical location, and if you’re lucky, you can only talk to someone on the phone, if you can reach them. I know this is apparent to a lot of people but a lot of people over-look this one factor quite a bit. Taking it into consideration is very simple but very important.
“Failure to consult with a professional”
The people that are hired to consult with you are not licensed attorneys or CPAs. You want to deal with an attorney who is experienced and has been recognized by his/her peers as having unique and legal qualifications.
If you visit the Action Advocacy website I linked to above, you will see at the bottom of the page all my merit badges. I tell people that I have been in the battle so long, that I have received many ribbons. And, indeed, it’s only fair that you receive these badges if you have been in actual combat, have been shot at numerous time and lived to tell about it – that’s when you should be given a medal. You can see all my ‘medals’ at the bottom of my website.
Also, in order to show no fear and no favor, you can go to the Connecticut Judicial website and under ‘Attorneys’ and click on Attorney/Firm Look-up. Simply type in the attorney’s name and discover if he/she has been publically disciplined. I have been in practice 30 years and have a ‘good conduct medal’ for all those years.
“Failure to obtain local references”
Have any friends used the service of a particular debt settlement company? Or have any friends or relatives used the services of the attorney/CPA? And what did they say? How long have they been in practice? Any special designations or recognitions? How long did it take for them to get your friend’s case in order? You can find references about attorneys and debt settlement companies all over the web. Don’t let this mistake go by unnoticed.
“Failure to provide legal representation when you are sued”
When you are doing debt settlement, the odds are at least 50/50 that you will be sued. Most of the scam debt settlement companies will tell you that they have a local attorney who will represent you. This is basically a deception. They do have ‘straw attorneys’ who ‘represent’ you, but they have no real incentive to represent you because the debt settlement company has to pay them and even they don’t want to pay for such representation because it’s money out of their pockets.
Consequently, the local ‘straw attorney’ who is usually just starting the practice of law and is very inexperienced but desperate for business, simply tells you to file for bankruptcy. And if the attorney is experienced, he/she uses the referral just as a potential for obtaining a bankruptcy client.
This is one of the great ‘Achilles heals’ of the debt settlement business. They deal in mass numbers and that’s where they make their money. There is no customized legal representation or planning because from the beginning the analysis is defective because it only represents ‘debt settlement’ which is one option and; therefore, you only consider one option due to the fact that you don’t want to hear the word, ‘bankruptcy’.
We represent consumer in debt settlement when bankruptcy is not a practical option or the person is completely adamant because ‘their Pappy didn’t file for bankruptcy and their Grandpappy didn’t file for bankruptcy and they’ll be damned if they file for bankruptcy’.
There are many technical reasons why someone can’t file for bankruptcy without ‘jumping from the frying pan into the fire’ or because they have a serious personal reservation against bankruptcy, but the options have to be dispassionately and professionally analyzed and discussed in making a decision.
A person’s fears and reservation about having an operation have to be respected. But the alternatives and consequences have to be professionally presented and discussed. And a professional will not give you placebos and ‘feel good medicine’ because he/she wants to prey on your weaknesses.
My final simple advise to you is to do the right thing by following all my tips above and feel free to contact us for a free consultation. Once you get into our office, you’ll sigh a breath or relief knowing your case will be dealt with most legally, with the highest standard of professionalism and complete transparency.