It has been said that many older Americans are “aging into debt." This phenomenon of increased indebtedness among retirees has occurred despite traditional beliefs that are adverse to debt. A number of factors, including predatory lending practices, increases in the cost of living, shrinking incomes, and the erosion of the safety net for older Americans, have all led to an increase in poverty and indebtedness among the elderly. For many older Americans retirement income and social security are not sufficient to meet their daily expenses. Elderly Americans are increasingly using credit cards to pay for basic necessities like food, essential home repairs, and medication. Many use the equity in their houses to pay these bills, further impoverishing them. Once their debt is unmanageable, older Americans fall victim in increasing numbers to companies offering to solve their debt problems. In reality these companies intend to take whatever money they have left and do nothing to alleviate their financial crisis.
The Neighborhood Economic Development Advocacy Project reports that a rising consumer scam affecting seniors is debt settlement. Debt settlement is marketed to consumers as an alternative to bankruptcy that will enable consumers to pay back all their debts at 50 cents on the dollar and be debt free in just a few short years. The idea behind debt settlement is that the consumer stops paying her credit card bills, and instead pays the debt settlement company. The debt settlement company does not disburse payments to creditors, but instead allows the settlement money to accumulate in a bank account. Theoretically, when enough money has accumulated to satisfy the creditor, the debt settlement company negotiates a lump sum settlement on the consumer’s behalf, thus eliminating the debt.
The scheme virtually never works. First, most major credit card issuers refuse to
negotiate with debt settlement companies. Second, debt settlement companies charge large
upfront fees, which the consumer must pay before she can start to accumulate settlement funds. In our experience, it takes the consumer about six months to pay the debt settlement fees and accumulate a small amount of money in the account. During this time, their debts double because of penalty interest rates and fees, and their credit scores take a huge hit. The credit card companies will not deal with the debt settlement companies, and instead often proceed to file lawsuits against the consumers at about the six month mark. The debt settlement company abandons the consumer, leaving her to deal with the lawsuits on her own. Although they fail to provide services, debt settlement companies usually refuse to return their fees.
Where does this leave you if you have been ripped off by a credit card debt settlement company? Statutory Regulations are powerful, but it is left to the debtor to use it. You can also turn to Seth Rosenberg of Smith & Rosenberg, PLLC. Attorney Rosenberg is the only attorney in the State of Washington who will take on the credit card debt settlement and home loan modification companies. Seth has an impressive track record in seeing the return of the consumer’s money and does so on a contingency basis. You can reach Seth at [email protected]. Act today to enforce your rights!