In November’s 2016 Consumer Finance Protection Bureau monthly report, debt settlement complaints topped their “other Financial Services” category by a whopping 2-1 over every other service in the category. The CFPB reports on all services financial. Leading the entire field are banks, collectors and credit reporting bureaus. In fact, the top 3 most complain about companies were the three reporting bureaus.
Debt Settlement Complaints 50% of Entire Category
Look down to the Other Financial Services category, and debt settlement services account for 50% of the complaints. The next closest were credit repair and check cashing(payday loans), which were 12% each. Finishing the category were money orders at 6%, Travelers/cashiers checks at 5%, foreign currency exchanges at 3%, and2% for everything else.
What’s missing is the lack of other debt relief products. While the report is not clear, my interpretation is that the CFPB knows what credit counseling, bankruptcy, and loan modifications are, and that they are not debt settlement features. I think it’s safe to say credit counselors and debt management agencies are not being lumped in based on that. Possibly because their bad players left the arena long ago and no longer even make a blip in the radar.
Yet Debt Settlement Firms Are Still a Problem
So if check cashing stores, aka payday loan lenders, can score 12% with all the baggage and “perceived” predatory lending tactics that associate with them, how glaring is the debt settlement complaints number at 50%? Obviously settling debt through a paid service is still a risky endeavor. There is still widespread dissatisfaction from results, no doubt because nothing has changed. Unlike credit counseling, lenders do not like or recognize debt settlement firms. Partial payback proposals are hit and miss with lenders. A lot of money in fees is spent by the consumer just to end up being harassed and possibly sued if a lender rejects a settlement. Discover is notorious lender for rejecting settlement firms’ proposals
If you are in debt, get all the information and look into credit counseling and even bankruptcy as alternates. Debt Settlement can be a great tool for some people. For many though, a debt management plan is a far better choice, especially for low debt loads. For the really high debt issues, qualifying for bankruptcy may make the smart first choice if available.