Debt Harbor, LLC

Our experience with debt negotiating 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 often claim that their services are more effective than those provided by credit counseling services and that they are a superior alternative to bankruptcy.

Complaints on these type of companies 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. Debts are seldom settled, customer's credit is ruined, and many people are sued forcing them to seek bankruptcy protection. Typically, it is difficult to obtain refunds.

These companies usually instruct their clients to stop paying their creditors. 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. They go on to say that their program may take two or three years to complete. Most companies collect their fees upfront and generally the fees are based on some percentage of the promised savings.

Other companies simply collect their fee and advise debtors to save their money to pay their creditors themselves. California law limits the amount of fees debt negotiators can charge, but by not collecting the money and distributing it to your creditors, companies can remove themselves from the limiting statutes and charge whatever they wish. What they are supposed to do for you while you’re saving up your money is to contact your creditors and inform them that they’re working with you, negotiate the amount to settle your debt, and ask them stop contacting you. Debtors may not realize that if their creditors do accept a negotiated settlement, the amount forgiven constitutes taxable income.

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

This company is acting as a referral service to Universal Debt Reduction, which provides debt negotiation servcies. A seperate report is available on that company. Typically these companies advertise via websites or on the radio that they are able to settle debts for far less than the amount owed, can stop creditors calls, and that the process is more effective than those provided by Credit Counseling Services. Although this company has no complaint experience, complainants allege about similar offers: that creditors continue to harrass them, fees and interest continue to accrue, their credit is worse than before, that creditors were not contacted or paid, and creditors sue for payment. Specifically, these companies rely on negotiating with the creditors for a lump sum payment, which generally requires the consumer to withhold payments for an extended period of time. Also, the fees for these services are generally required to be paid in advance before any services are performed. These companies instruct the consumer not make payments to their creditors, but instead to them and they will hold the funds until such a time they believe they have enough funds to make an offer. It is during this time that the creditors will likely take steps to secure payment, such as; telephone calls, derogatory credit reporting, arbitrations or law suits. For the foregoing reasons, we advise caution in dealing with debt negotiation/settlement companies.