Debt Settlement Company Complaints

Business Credit Some debt settlement companies ask you to stop paying bills even though you are legally obligated.

by Bill Riales

Published: Tue, November 17, 2009 - 6:03 pm CST Last Updated: Tue, November 17, 2009 - 6:16 pm CST

MOBILE, Alabama - Many companies have sprung up in the past year and a half offering to consolidate or settle your outstanding debt. That kind of help may be too good to be true.

Dianne George said she had several credit accounts, all current. But she struggled to make all of the payments. Enter financial savior Whitestar Financial of Boca Raton, Florida.

"And the guy showed me that I would have the best credit rating, you know, we're going to pay your bills, the bill collectors are not going to bother you," said George.

With that promise came the first red flag, the upfront fee. In this case it was $289.00.

"What brought my attention to it was my sister, after I was in the program," George said. " She said why would you pay somebody when you could go to consumer's credit?"

George also agreed to $300 a month to go toward her debts. But she said Whitestar took more than $300 from her account and didn't pay her debts. Creditors still called.

"I mean it has really left me in a bad situation," said George.

The Better Business Bureau says they've received a number of complaints just like hers.

Tina Waller of the BBB says, "Debt settlement companies are different from debt negotiation and debt consolidation companies. There are different programs and you need to be very careful and make sure you are very clear on what program you're signing up for."

For example, debt settlement companies may tell you to stop paying your creditors. The problem is you are still legally obligated to pay them. The idea is that credit card and other companies are not motivated to settle until you are several months behind and they don't think they'll get paid anyway. For Dianne George, three months of dealing with Whitestar Financial put all of her accounts three months behind.

"I am more in debt now than I was before," she says.

Whitestar Financial declined to comment for this story. George said she did receive a $475 refund from the company last month.

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