A Roll of the Dice: Debt Settlement Still a Risky Strategy for Debt-Burdened Households

33 Pages Posted: 1 Feb 2014

See all articles by Ellen Harnick

Ellen Harnick

Center for Responsible Lending

Leslie Parrish

Consumer Financial Protection Bureau

Date Written: November 1, 2013

Abstract

Debt settlement companies purport to offer debt-burdened consumers a way to become debt-free while paying substantially less than what they owe, particularly on their credit cards. Updates to the Federal Trade Commission's Telemarketing Sales Rule in 2010 improved consumer protections by instituting a ban on the charging of fees in advance of settling a consumer's debt. However, using data reported by the industry's trade association, we find that debt settlement is still a risky strategy and often leaves consumers financially worse off.

Keywords: debt relief, debt settlement, credit card debt, bankruptcy, debt management plan, credit counseling

Suggested Citation

Harnick, Ellen and Parrish, Leslie, A Roll of the Dice: Debt Settlement Still a Risky Strategy for Debt-Burdened Households (November 1, 2013). Available at SSRN: https://ssrn.com/abstract=2388236 or http://dx.doi.org/10.2139/ssrn.2388236

Ellen Harnick

Center for Responsible Lending ( email )

302 West Main St
Durham, NC 27701
United States

Leslie Parrish (Contact Author)

Consumer Financial Protection Bureau ( email )

United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
39
Abstract Views
389
PlumX Metrics