Another day, another suit against the scam artists that peddle their debt settlement promises. The State of Illinois sued 5 debt settlement companies. The biggest loser is always the customer who trusted what they were told more out of desperation and naivety.
Debt settlement companies will simply never get the results or be held to the ethical standards that an experienced lawyer will. Never. It is tragic to read story after story of students getting ripped off simply because they didn’t know that better options were available.
There are a few obvious benefits a lawyer offers that a debt settlement company never will:
- A lawyer often costs less! This surprises people. Fees are often similar between a decent debt settlement company and a lawyer but the lawyer often negotiates better settlements. Think about it, why would a lender give as good a settlement to a debt settlement company when they can just file a lawsuit? The debt settlement can’t answer the suit nor can they do anything else. An attorney, particularly one who does a lot of debt settlement work, will often negotiate better settlements and be able to represent the student if the lender sues.
- A lawyer must adhere to strict ethical guidelines. All the lawyer jokes aside, lawyers are accountable to the state bar where they practice. State bars are serious about policing their members. A grievance can be filled with the bar if an attorney has behaved unethically that will be investigated. Attorneys have invested too much in their education and careers to play fast and loose with the rules.
Debt settlement companies don’t have these requirements. Anyone who wants can hold themselves up as debt settlement experts. The debt settlement industry got so bad that several years ago the federal government stepped in to regulate the bad actors as best they could. In my opinion, much of the same problems still remain. And they will not be fixed until non-lawyers are not allowed to represent students and others in working to resolve their debt for less than the amount claimed due.
- No performance, no fee! This one is huge. A reputable debt attorney won’t take a fee if they weren’t able to negotiate down the debt. Look in their fee agreement to confirm that if a settlement isn’t made, you don’t pay anything more and what you have paid is refunded. Debt settlement companies take fees and as the attorney general in Illinois discovered, appear not to do anything for it.
Student loan debt is a national crisis. Some can help in legitimate and significant ways while others are a scam that makes a bad problem worse. Be a smart consumer when it comes to private student loan help. Real life changing help is available if you know what you’re look for. Find it!!
Kevin Fallon McCarthy
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