I’ve written in the past advising consumers not to use for-profit debt settlement companies to resolve their debts. The New York Times published an article this week detailing some of the problems with debt settlement companies. The story features a West Virginia couple that worked with a debt settlement company who, predictably, failed to negotiate a resolution with the couple’s creditors. The couple paid nearly $4,000 for this “service”, only to see their debt balloon and their credit scores drop. The debt settlement company, Credit Solutions, was recently sued by the attorney general of the State of Texas over its practices. The company’s own data shows that nearly 80 percent of its accounts do not settle. And for the accounts that were settled, many were settled for more than the 40 cents on the dollar that Credit Solutions promised in its advertisements.
Meanwhile, the Washington Post has a story about President Obama’s meeting this week with representatives of the credit card and banking industry. The President will supposedly warn the industry to “support strict measures that curb lending abuses or face the wrath of angry consumers and a determined Congress,” according to banking industry officials.
Finally, the Colbert Report ran a segment ridiculing HR 1214, the house bill designed to “regulate” the payday lending industry. The bill seeks to legalize a 390% APR for 2-week payday lending loans and a 780% APR for a 1-week loan.
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|The Word – Have Your Cake And Eat It, Too|