“Credit Repair” companies are springing up everywhere. I just want to know one thing: Where are they getting the money for their ads Press, radio, and now television ads for these “services”: this all adds up to a lot of money. WHERE is that money coming from In my experience, con artists (other than banks) have a limited front-end budget. These people do not. For an essentially “new” industry, they are spending advertising dollars like crazy. Where is it coming from Is it outfits like Capital One et. al. who are trying to squeeze the juice out of the turnip before the turnip realizes it has a bankruptcy remedy one of the most tragic stories I run across (a lot) in my practice are the folks who liquidate what little scraps they have left in 401s to fund this kind of crap only to be told by me that they could have kept their money and gotten rid of the credit card forever. After a year of payments, when the clients are getting no relief from calls and suits, they quit, and the companies keep ALL of the money as their fee. Only once did I see a client (who filed a 13) who actually got a settlement from two creditors, Direct Merchants and HSBC. And then Portfolio Recovery and eCast filed claims in the 13 for the full amount of the same debts! We objected to the claims and they called and volunteered to withdraw them (which you cannot do once an objection is filed). How many cases do they do that in where they’re not caught There is big money in this, that is why they keep popping up. I hear the FTC is starting to really look at this. I did referral defense work for one of them. When one of creditors didn’t want to play ball anymore and got one of the local collection mills to file suit against their client I would defend their client in the local lawsuit. I would try to settle the matter before trial, but guess who is holding all their money and didn’t settle the lawsuit. Most of them operate by collecting so much from the client each month that is going first to pay the collection firms fees before paying anyone else. So maybe the first six months of payments is going to the debt consolidator firm before anyone else gets paid. In the meantime one creditor doesn’t want to play this game anymore and files suit. They don’t settle and the client ends up with a judgment against them that I didn’t have much of a defense to in this state. The client has sent all his money into the debt consolidation outfit so they don’t have money to settle. So their then upset client client cancels their service, but the debt consolidator refuses to refund their fees. I stopped handling the cases when I found that they were only settling 1 in 8 cases. They set people up to fail and keep all the money. Also, Chase announced that it gives no better a deal to debt companies than to customers and Citi may sue once they get involved.
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