With their big promises and heavy fees, “debt settlement” companies target business owners with hopes of lowered payments and reduced obligations, without any intention of providing these services. Remarking on the “fraudulent, abusive, and deceptive practices of debt settlement companies,” the Ohio State Law Journal notes studies finding that less than 10% of clients of these companies receive any of the services for which they paid, instead finding themselves saddled with “trashed credit,” “lawsuits,” and even more debt than before. The heart of the scam is shamefully simple: keeping the client’s “settlement” payments without ever paying the creditor:
Each year, thousands are persuaded by the promises of debt settlement companies but unfortunately end up paying as much as 75% of the amount they owe into an account managed by the debt settlement company without ever settling any debt.¹
Surprised clients then find themselves with a lawsuit from their creditor (along with the resulting legal fees) and little more than a shrug from the debt settlement company that pockets their money. The key point to remember is that the debt settlement company has no incentive to actually work for you; as industry insiders admitted to investigators, “settling debt is counterproductive to making money.”¹ Fortunately, these scams have come under increasing scrutiny, with “debt settlement” company CEOs finding themselves jailed for fraud.²
The simple truth is that the best company to go to in order to settle your debt is the company for which you have the debt in the first place. If you’re having trouble making your payments, your first call should be to your cash advance company who, unlike a “debt settlement” company, has a real incentive to work with you on completing your obligations. Like other cash advance firms, Coconut Funding does not work with these fraudulent “debt settlement” companies.