Alleviate Financial Solutions

Our experience with debt negotiating/relief companies is that they attract customers with large credit card debt by claiming to be able to settle those debts for a fraction of their face value. They promise or "guarantee" to settle all of your credit card debts and then collect their own fees from you before they have settled any of your debts. Some companies' direct clients to make their payments to the debt negotiation company instead. They promise that when sufficient cash has been accumulated to offer a settlement to a creditor, they will do so. These companies usually instruct their clients to stop paying their creditors. Most companies collect their fees upfront and generally the fees are based on some percentage of the promised savings. Some fail to explain the risks associated with their programs: for example, that many consumers drop out without settling their debts, that consumers credit reports may suffer, or that debt collectors may continue to call you. Debtors may not realize that if their creditors do accept a negotiated settlement, the amount forgiven constitutes taxable income. Complaints on these types of companies generally allege that creditors continue to harass clients, fees and interest continue to accumulate, and the creditors are not contacted. Usually, creditors turn the claims over to collection agencies, file suit and pursue collection of the money owed to them. Others are sued forcing them to seek bankruptcy protection. Typically, it is difficult to obtain refunds.

The Fair Debt Collection Practices Act, prohibits debt negotiating/relief services from: collecting any amount prior to at least one debt being settled; all fees and any conditions regarding its services must be explained; you must be given a timeframe for how long it will take to get results, specifically, how many months or years before an offer to each creditor for settlement is made; they must disclose how much money or what percentage of each outstanding debt you must save before making an offer to each of your creditors and you must be informed of the possible negative consequences that may occur if you are instructed to and choose to stop paying your creditors.

For businesses outside of California, please check with the agency that regulates this industry.