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Creditors and Bankruptcy/Is clean-up/debt reduction offer a scam?



My girlfriend has racked up CC debt totaling approx $12k.  Her annual income is only about $24k  She is now being contacted by companies offering to reduce her debt and she's wondering if they're scams.  For example, a company called "Prime Solutions" (maybe in Colorado, but not sure) is asking her to sign on with them.  They're telling her to pay them @ $600, then she is to allow her CC accounts go delinquint for 3 months.  Then they will step in and work their magic.  They claim her debt will go from $12k down to $6k and she'll be paying $300 per month for 18 months to Prime Solutions.  

Offers from other companies (e.g. White and Kapetan, et. al.)have been largely the same.  Is th is a scam?  What are the risks/liabilities here?  If these are not legit, do you have any suggestions as to how she can reduce or reorganize her debt?

Thanks - Curt

Dear Curt,

This is an important question. I am not familiar with the companies that you specifically mention. However, I am very familiar with the "debt settlement industry."

Perhaps there are some legitimate settlement companies, but I have never heard of one.

I suggest you take your girlfriend to see a bankruptcy lawyer. If she is able to do Chapter 7 bankruptcy, (and it sounds like she will be able to), she can wipe out those debts without paying them anything.

Just for fun of it, let's assume what those companies are telling her is completely true. If so, 1. She is out $6000, and 2. Her credit is wrecked. (Settlement of a debt does not save nor restore a person's credit).

I would like you to read my blog article about bogus debt settlement companies.

In my article I explain exactly why these things are scams, and you will see for yourself, mathematically, why they don't work. But don't just take my word for it. Have your girlfriend call a few of her creditors. She can ask them if they will work with the settlement companies you are asking about. I know what their answer will be, but she she should hear it for herself.

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Los Angeles Bankruptcy Attorney Leon Bayer


I can answer all questions relating to debt collection, credit reporting problems, credit scores, bankruptcy, debt settlements, debt settlement scams, and dealing with debt collectors. For many years I have been one of your volunteer experts for the topic "Bankruptcy Law". I would like to receive more questions. I'm thinking that many relevant questions get asked under this catagory as well as my own. See my stats, below: Los Angeles Bankruptcy Lawyer Leon D. Bayer U.S. Available View Profile Ask A Question View Past Answers Knowledgeability9.96 Clarity of Response9.93 Politeness9.97 Response Time(hr)14.6 --Last 90 Days(hr)7.6 Total Questions1119


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