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This is an interesting article, written by a New York Times writer, on her personal experience with debt settlement solicitation. Her reaction is to be suspicious of the upfront fees that the debt relief counselor requested for their services.

She turns it into a story about the upcoming FTC TSR/Debt Relief public forum, with an interview of The Consumer Federation of America:

“‘People are given false hope,’ said Susan Grant, director of consumer protection at the Consumer Federation of America. Ms. Grant said she planned to participate in a public forum the Federal Trade Commission was holding in Washington today to discuss amendments to its Telemarketing Sales Rule to cover for-profit debt counseling, debt negotiation and debt settlement services. The Consumer Federation of America and 18 other organizations also recently filed comments with the F.T.C. on the issue”

The blogger offers some good advice to consumers. She encourages them to first do a bit of their own debt settlement work by calling the creditor and attempting to negotiating some relief on their own.

However, I think this is a bit naive of what the average consumer in debt trouble is really experiencing.

Most likely the consumer is already in severe trouble (or at least it feels hopeless) by the time they realize they are in trouble. Chances are their first wake-up call is when they can’t make minimum payments. That means their debt-to-income ratio is already way out of whack.

At this point a calm and rational conversation with a creditor is way past due. Chances are the harassing phone calls are already beginning and your call is not going to be routed to a helpful customer service rep, but rather a hard-nosed collector.

I’m not saying reform in the debt settlement industry isn’t necessary, but I do think this article is far too simplistic in covering the issues. Thoughts?

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Related posts:

1. New York State Attorney General Going After Debt Settlement
2. The Federal Trade Commission (FTC) TSR/Debt Relief Forum
3. Debt Management versus Debt Settlement, What is Your Strategy?
4. FTC on Real Benefits of Debt Settlement Industry
5. Consumer Debt Index Skyrocketing, What are Your Doing to Fix It?