By Liz Weston NerdWallet.com, Aug 30, 2017 (a summary from South Bend Tribune)

•  One woman didn’t realize she would face a tax bill on the forgiven debt.
• A man opted against bankruptcy in part because he erroneously thought he would lose personal possessions.
• Another woman was shocked at how far her credit scores tumbled and how much interest she was charged when she applied for a car loan.

Where debt settlement falls short

Here are some of the biggest problems with debt settlement:

• If you pay less than the full debt you will be taxed on the amount “forgiven”.  This is referred to as forgiveness of debt.  (Note – this does not usually happen in bankruptcy).
• Negotiations can take years (usually three to four years). Meanwhile, customers risk being sued over their debts.
• The math often doesn’t work. The total cost of the settlement can equal 90 percent or more of the original amount owed.
• Many debt settlement companies unfairly demonize bankruptcy. In reality, most chapter 7 bankruptcies take a few months and the filer can keep most of their assets.
• Both debt settlement and bankruptcy drop credit scores into the mid-500s. Credit scores can begin to recover immediately after either process is complete (chapter 7 bankruptcy typically takes months, while debt settlement typically takes years.) Plus, bankruptcy halts collections activity, including lawsuits, and can end wage garnishments.

Link for bankruptcy help

MUSINGS BY DIANE:

The only company I recommend for a debt workout is National Foundation of Consumer Credit Counselors “NFCC.org“.  This is the only true non-profit that I know of.  There have been so many scams over the last 40 years that I just gave up trying to find a legitimate alternative to bankruptcy.  It was not worth the pain and suffering for my clients, who ultimately had to file bankruptcy after throwing away thousands to these scams.