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Advanced Fee Debt Settlement

An advanced fee debt settlement company is simply a phrase that describes a debt settlement company which takes its fees in advance of performing any settlements. A typical advance fee debt settlement company will base its fees on the amount of debt you want them to settle. The fees normally range from 15% to 30% of the overall debt amount you put on the program. So, if you have $20,000 in debt on the program, the debt settlement company would charge you $3,000 to $6,000 in fees. Please be aware that this fee is usually not the only fee a debt settlement company will charge.

There are many problems with such fees, and the structure of an advance fee debt settlement company will oftentimes leave a consumer in a worse position than when the consumer sought out their assistance. A very common timeline of occurrence when dealing with a debt settlement company is as follows:

  1. A consumer signs up with an advance fee debt settlement company and agrees to pay its fees over the first 12 months of the program,

  2. The entire monthly payment, or a substantial portion of the monthly payment is taken by the debt settlement company for its fees, rather than going into a trust account to save for a settlement,

  3. At some point in the 36 to 60 month program, the consumer is sued by one of their creditors. Since there is no, or very little money in their savings account, they have few options.

  4. Upon hearing the consumer’s complaints, the debt settlement company points to the provision in its contract whereby it specifically declined to represent a consumer in a court of law.

  5. The consumer must find an attorney to defend the debt, or even worse, to file bankruptcy on his or her behalf.

This is an extremely common scenario and is evidenced by the multitude of lawsuits, both individual and class action, that have been filed on behalf of consumers against debt settlement companies all over the country. Further, the vast majority of debt settlement companies are violating state and federal law by charging these large advance fees. Not every debt settlement company is violating the law and deceiving consumers, but a great many are doing so. If you find yourself in a situation whereby you have paid money to a debt settlement company and it has not delivered as promised, you should contact a consumer law attorney. Such an attorney may be able to recover the money you lost to a debt settlement company of ill repute. Thankfully, most consumer law attorneys will take on a case such as this with the expectation of getting their attorney fees paid by the opposing party.

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Financial difficulty can be a stressful and overwhelming emotional experience for anyone. Your hard earned dollars are a stake and it is understandable that you have a lot of questions. The Luftman, Heck & Associates Consume law attorneys are on your side. Get answers to your questions and concerns by contacting Luftman, Heck & Associates Consumer Law attorneys today at or email us at advice@ohiodebthelp.com.
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