Do your homework before you turn to debt consolidation - - Tyler, Longview, Jacksonville |ETX News


Do your homework before you turn to debt consolidation

$25,000 in debt and struggling to make ends meet, Debra Hurley went online looking for help.

There were plenty of choices.

Hurley contacted a Florida company that promised to deal with the creditors & settle her debts for pennies on the dollar. She would pay $600 up-front plus $25 a month in fees, then deposit some of her paycheck into an escrow account for the company's use.

She says they didn't even come remotely close to following through on their promise.

"Nope," she said. "I just got more stress."

In the last few years, the number of debt settlement companies around the country has exploded. So too has the number of complaints, up more than 60% this year in Florida alone- where some two-dozen companies are under investigation by the state's attorney general.

"They're just out there scamming people and taking their money, then they walk away and are never heard from again," said Debra. "They're telling me if creditors call use caller ID."

Hurley says the debt-relief agent told her to stop paying her creditors and avoid their calls while he negotiated with them to accept less money.

But the creditors kept calling, late fees kept climbing and she fell deeper in debt.

"Some creditors will not work with debt settlement companies, and your credit is going to be absolutely trashed."

But Robby Birnbaum with the association of settlement companies says there are many reputable firms you just need to look carefully.

"What they don't see are the good companies in the industry that are protecting consumers, that are charging fair and reasonable fees, the ones that help keep consumers out of bankruptcy."

Too late for Debra Hurley, who says she shelled out nearly two months salary with nothing to show for it.  

"I have to declare bankruptcy without my creditors coming in and taking everything I own," said Hurley.  

These companies aren't licensed and there's no federal regulation. Check with your local Better Business Bureau for tips on the most common traps.

Story and video courtesy of CNN Newsource.

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