Debt Negotiators May Offer Little Help as Credit Card Bills Bury Consumers

[Joanne98]

May 29 (Bloomberg) -- Ulish Hopkins, a former bus- dispatcher from Chicago, turned to a debt-settlement company last year after piling up about $30,000 in credit-card bills. Seven months later, he owed close to $40,000.

Hopkins says the company told him it could reduce his bills by about 50 percent through negotiations with lenders. He was told to stop paying creditors and to put monthly payments in an escrow account, which the firm used to cover its fees. Instead of reducing his bills, interest and late fees raised his indebtedness and damaged his credit score.

“They never told me that the money I was paying wasn’t going to my debt, it was going to them,” said Hopkins, 59, who quit work in January 2008 after a brain tumor led to surgery. He now receives $1,539 a month in disability checks. “You are better on your own.”

Credit-card delinquencies are at record highs, according to Fitch Ratings, and the U.S. unemployment rate of 8.9 percent is the highest since 1983. As more consumers fall behind on bills, settlement companies often end up adding to the debt burden rather than offering a cost-saving solution, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Maryland.
http://www.bloomberg.com/apps/news?pid=20603037&sid=aMgSZ347XLBM&refer=home

[ejpoeta]

1. gotta watch those guys. many of them are shams. it's amazing to me how many

of these companies are out there that just screw the people that are trying to pay the bills. they are trying to do the 'right thing' and they get screwed. these companies need to be put out of business by the government. where is the oversight!!

[pokercat999]

2. If you pay for credit help IT'S A SCAM!!!!! period nt

[sendero]

3. Exactly..

... these companies are largely unregulated in most states. Some of them are fronts for the CC companies themselves, merely a scam to make sure they get every possible penny out of each "deadbeat".

The rest are mostly simply for-profit companies that have no power to reduce anything. They are merely taking advantage of the latest easily victimized class of people. They are scum.

[inna]

4. that is just terrible and should be illegal. thanks for the "alert". nt