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Maximizing profit: the real goal of debt settlement companies

They’re really not your friend, and the best interests they have in mind are decidedly not yours.

When it comes to most debt relief companies, those are just the cold, hard facts, says Steve Rhode, a financial writer who contributes to the Huffington Post under the moniker “Get Out of Debt Guy.”

A recent article from Rhode holds debt settlement companies under a strong light. Frankly, they can’t stand the scrutiny.

Here’s a central point conveyed by Rhode, which can be illustrated through a contrasting reference to a bankruptcy attorney. An attorney well-versed in representing clients with debt-related problems does, unlike debt reduction companies, have their best interests at heart. In fact, that attorney has a professional responsibility to act at all times in a manner that best promotes a client’s legal interests.

Companies that promise a debtor light at the end of the tunnel operate under no such restriction. As Rhode notes, they “put their needs before yours.”

And their need is obvious. It is to earn commissions and make money. Logically, in many instances that goal is not promoted by candidly discussing with a debtor debt-relief options that include bankruptcy. What is far more conducive to profit making is an arrangement that ties the debtor to a debt relief company or agency for an extended period.

Over such a time frame, a consumer’s debt is often not being reduced. In fact, and owing to both contractual fees being paid the debt company and steadily accruing interest and related costs on existing obligations, the amount of money owed might be constantly increasing.

For many consumers, the debt spiral can be responsibly tackled through an initial meeting with a proven bankruptcy attorney and a subsequent debt-reduction plan that considers all viable paths toward financial freedom.

That plan must promote the client’s -- and no other party’s -- best interests.

Source: Huffington Post, "Why debt relief is broken in America," Steve Rhode, Nov. 13, 2013

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