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Debt Consolidation: Beware of Charlatans!

Nearly every day we either see or hear an advertisement related to consumer debts. Lawyer advertising is regulated by the State Bar of Texas, so the following discussion has nothing to do with lawyer ads, as all the ones I’ve seen and heard comply with the rules.

Every day we hear these ads and we hear flat out lies. “Bah,” you may be thinking, “he’s getting all lawyer on us. No way these companies are lying on TV or the radio, what about the truth in advertising laws?” We hate to tell you that we have no such laws.

In Texas we have the Deceptive Trade Practices Act (“DTPA”) but once you sign a contract with a charlatan, you’d be hard-pressed to prove that you were harmed under the DTPA.
Here are some of the lies (in bold italics) I hear:
You have the consumer right to settle your debts for pennies on the dollar. (Actually, you don’t)
Recent credit card legislation gives you new rights to settle your debts! (There is no such law)
If you have more than $10,000 in debt we will get you out of it, all without debt settlement, consolidation or bankruptcy. (Really? I guess they intend to pay your debts because I am not sure of any other way, other than dying, to get out of debt without paying, settling, or filing bankruptcy.)
Bankruptcy will destroy your credit forever (Several million people who have received a bankruptcy discharge and have excellent credit might want to dispute that.)
We guarantee results (Technically this is not a lie, so long as the definition of “result” is very broad. Keep in mind that taking your money and doing nothing for you is a “result”.)
Charlatans in the world of distressed consumers is nothing new. In 2005 and 2006, Congress revoked the non-profit charters of numerous “credit counseling” agencies for two fairly simple reasons: they weren’t really not-for-profit, and they weren’t exactly doing any counseling. (Read this article in the Washington Post).
One would think that Congress’ attempts to clean up the industry nearly 10 years ago would have had an effect. One would be wrong. Click any of the links below to see what you get when dealing with most debt settlement companies: (PDF)

Read the other articles from our Debt Settlement Primer
1. Debt Settlement Primer 2. Step-­by-­step timeline 3. Beware of the charlatans 4. Costs 5. Interchangeability of terms 6. Do’s and Don'ts

Click this link to download the Texas Debt Settlement Primer (PDF)



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