Great question. It sort of depends on what the individual's goal is to do.

For example, I see some benefit to this type of service if the individual wants to avoid bankruptcy or can't qualify (or doesn't want to do) Chapter 7 and maybe would be in 100% Chapter 13 plan where the payment would be too high.

If someone goes this path, I would say to look at 4 things:

1. What percentage fee do the firms charge. Most firms charge 15-25%, but that is a HUGE range.

2. What are the BBB complaints and negative Google / Yelp reviews. Basically, try to find unbiased review sources. Oftentimes, people will look up debt relief and see an ad for top debt relief firms, click on that, and then just choose one-off that page. The challenge with that is that the top result on Google may be an ad, which they pay for, so it may be quite a bit more biased toward firms that spend a good amount of time on PR.

3. Understand whether the banks you owe money to are likely to sue you for unpaid debt. Too often debt relief firms don't seem to tell these to people, and it's a negative experience to get a debt collection lawsuit.

4. Understand whether you can avoid paying taxes on debt settlement legally by being tax insolvent. This is another thing I wish debt settlement companies were upfront about.

Alternative to debt settlement:

1. Yeah, budgeting better can help if you have some expenses that don't bring you benefit that can be cut easily. Some people have done this and still have no room.

2. Getting a side hustle to increase income could be helpful, but some people just don't have the time to do this.

I'd probably prefer these options as your credit score may stay intact.

If you can't do these, the common alternatives to debt settlement would be nonprofit credit counseling and bankruptcy.

Yeah, I would love for more regulation and shutting down of these firms via the CFPB. It feels that most companies just try to sell you on the default on debt scheme, but there needs to be some accountability on the quality of the calls. I've heard times when companies don't even tell you that you could get sued while in the program.

I believe the model started in the early 2000's, and there were a lot more sketchy debt-relief companies that would take fees before any debt was settled, but thankfully, they introduced Dodd-Frank that basically made it illegal to charge upfront fees. Here's a CFPB post about them taking action to shut them down: https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-to-stop-florida-company-from-engaging-in-illegal-debt-relief-practices/

What we found when we started is that there may be value ONLY if you face financial hardship and CANNOT pay the debt in full, not something you utilize just to get off the hook easily.

Why is it not illegal? I really do wish that at least some of these companies were banned at some point or there's much tougher regulation as I saw recently one instance where it appears the debt relief companies settled paid like $120 to creditors and then extracted like $2000 in fees from a hospice nurse that was getting payday loans to cover the monthly payment to the debt relief company. It was heartbreaking and made me so angry.

Oh my goodness, that does seem unhealthy to go from 3:1 to 20:1.

>could smell what was going on and didn't like it...
>
>What's your ratio of employees who engage in sales activities to your employees who deal exclusively with lenders?

Firstly, sorry to hear about your experience. That sounds really difficult but glad you were able to quit beforehand.

Personally, we had about 50% vs 50% in terms of onboarding and negotiation. I'm curious about what the ratio was at your firm?