Analysis: Debt Relief Firms Putting Debtors in a Deeper Financial Hole - Why you should see a Bankruptcy Attorney Instead

The long recession has delivered an abundance of customers to the debt settlement industry as debt-saturated Americans continue suffering lost jobs and income, sliding toward bankruptcy, the New York Times reported on Saturday. The settlement companies typically harvest fees reaching 15 to 20 percent of the credit card balances carried by their customers, and they tend to collect upfront, regardless of whether a customer?s debt is actually reduced. State attorneys general from New York to California and consumer watchdogs like the Better Business Bureau say that the industry?s proceeds come at the direct expense of financially troubled Americans who are being fleeced of their last dollars with dubious promises. Consumers rarely emerge from debt settlement programs with their credit card balances eliminated, these critics say, and many wind up worse off, with severely damaged credit, ceaseless threats from collection agents and lawsuits from creditors. As the industry has grown, so have allegations of unfair practices. Since 2004, at least 21 states have brought at least 128 enforcement actions against debt relief companies, according to the National Association of Attorneys General. Consumer complaints received by states more than doubled between 2007 and 2009, according to comments filed with the Federal Trade Commission.

http://www.nytimes.com/2010/06/19/business/economy/19debt.html