Debt settlement companies negotiate with creditors to reduce the amount of debt a borrower owes, unlike debt management companies or credit counselors, who work to achieve an affordable monthly payment. Consumer complaints about debt settlement companies to the Illinois Attorney General have skyrocketed in recent years. Consumers reported that many debt settlement companies promised to reduce debts substantially and charged high up-front fees but had low success rates in achieving debt relief.
Their story is not uncommon. In fact, the Illinois Attorney General’s office has seen a sharp rise in complaints against debt settlement companies, culminating in a lawsuit filed earlier this month alleging four companies of abusive and deceptive practices. “These companies are unfairly luring financially strapped consumers with misleading claims that they can effectively eliminate consumers’ debt,” Attorney General Lisa Madigan says.