Many TV and Radio commercials advertise that you can “Eliminate Debt”. They make a false claim that because of “new laws” passed by congress regarding economic recovery “you have the “right to settle your debts for less than the full amount”. THIS IS NOT TRUE.
The only law regarding your absolute right to settle debts for less than the full amount is the bankruptcy code. Most of these “debt consolidation” companies charge a fat fee to set you up in a “debt repayment plan”. Other than the exorbitant fees involved, the idea is a good one. The problem is that in most cases the debt restructuring companies cannot get the cooperation of one or more credit card companies. So the scenario begins with payments deducted from your checking account and ends when you find out, after being sued, that one or two credit card companies are not part of the plan and you need to file a Chapter 7 to stop the lawsuit. All the money paid into the plan has been wasted because you could have included all those debts in your Chapter 7 anyway. I have had several clients waste $8000 $9000 or even $16,000 on a plan, only to later find out they could have eliminated this debt in a Chapter 7.
The only way to find the correct path for you is to have a free consultation with a real practicing bankruptcy attorney. The only way to actually eliminate debt is bankruptcy. The other option is to settle your debts for less than the full amount.