FARGO
You've probably heard or seen their advertising:
Companies promising quick relief from debt by getting creditors to write off part of what they're owed.
But reality often falls far short of the promises, credit counselors say.
"Most of the time it doesn't work out very well," said Duane Emmel, credit counselor with The Village Family Service Center in Fargo.
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Debt settlement is a process in which creditors agree to accept less than the full amount owed, yet consider the balance as paid.
Debt settlement companies, also known as debt negotiators or arbitrators, charge sizable fees, which sometimes are paid before customers see any benefits, said Darryl Dahlheimer, Minneapolis-based program director with Lutheran Social Service Financial Services in Minnesota.
Other potential pitfalls of using a debt settlement company include possibly crippling your long-term credit, he said.
The debt settlement industry agrees it's not perfect.
"There are bad actors in our industry. There are bad actors in every industry," said Chris Kesterson, president of The Association of Settlement Companies and chief executive officer of Dallas-based Debt Settlement America.
His association has about 155 members.
However, experienced, competent settlement companies can offer a solution when other options aren't viable, he said.
Kesterson recommended that anyone interested in using a debt settlement company check out his association's Web site, www.tascsite.org .
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Dahlheimer's advice?
"Consumers should exercise extreme caution if they decide to work with a settlement company. Many of these companies are very new and inexperienced."
The Forum of Fargo-Moorhead and the Herald are Forum Communications Co. newspapers.
