The New York Attorney General’s office has announced an investigation into 14 debt settlement companies across the country, which it says “often prey upon consumers who find themselves unable to keep up with credit card payments in these difficult economic times.” In a recent press release, Attorney General Andrew Cuomo described debt settlement as a “rogue industry” that charges “tremendous fees” and leaves customers in “a worse financial situation.” The release stated that, based on consumer complaints, it appears that the companies under investigation may have made false promises as to how much of a person’s debt could be reduced and kept fees without delivering promised services.

This is just the latest in a long series of cautionary tales about the debt settlement industry. If you’re facing overwhelming credit card bills, call your credit card companies and ask about their hardship programs. You may be able to settle your debts for less than the full amount due without the “help” of a debt settlement company. Just be aware that you will likely owe income taxes on any amounts that are forgiven. Another good alternative is to work with a credit counseling agency affiliated with the National Foundation for Credit Counseling.

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Categories: Credit/Debt