Debt-settlement firms being targeted by Texas on clarkhoward.com

The state of Texas is going after debt-settlement outfits that claim they can negotiate your debt down to just pennies on the dollar or wipe it out altogether.

The firms in question include BC Credit Solution, FH Financial Service, Four Peaks Financial Services and DebtORSolution.

"The defendants unlawfully misrepresented and overstated the nature of their services," according to a press release from the Texas attorney general's office.

Most debt-settlement outfits ask their customers for an upfront fee, plus a monthly retainer. Their strategy is to get you to stop paying on your bills; the basic idea is to make the credit card companies so desperate that they'll settle with you. The reality, however, is that you wind up damaging your credit.

The debt-settlement outfits have supposed money-back guarantees, but this is really just a one-way street with you giving them money -- not the other way around.

Is there a kernel of truth somewhere in the claims of the debt-settlement companies? Yes, they may be able to do some negotiating on your behalf, but in the meantime your credit will be trashed.

Here's another gotcha: You'll get a 1099 form for any money that a creditor forgives. It's considered "phantom income" by the IRS.

What others are saying

FH Financial Services
I find it rather strange when you call the President of the company and get a recorded voice message from a programmed voice message receiver and not Mr. Hunt's.
I also keep getting different people that handle my account. Now I am concerned and would like an explanation on a copy of "Power-of-Attorney" that I was told was sent to the bank, the bank says no copy, and I am receiving calls and bills that I SHOULD NOT be receiving at this point. I would like to believe that FH Financial Services are doing their job and doing it within the relms of the law. I would think that if you are assigned to an agent the agent would be competent. The number of the collection company is true and works. Why not for you? What do I do? I am NOT going to get into trouble--I REFUSE.
By Donna @ 12/15/09 09:40:18 AMreport abuse
Bankruptcy
We are trying not to declare bankruptcy; however, I feel they almost make you. We have a motorhome we used for business and it is worth 100,000 less than we could get for it. If we have to declare that as income to the IRS, how do we get out from under? In addition, we owe 60,000 incredit card debt ad we were hoping to negotiate that down. We are both looking for jobs but our income is non existent at this point.
By Kandy Thorson @ 09/28/09 11:46:51 AMreport abuse
The real scum bags
The real scum bags are the credit card companies and their collection agencies. Their abuses are rapent and the government has down little to stop them. They are legalized loan sharks. Debt Settlement companies help consumers by fighting on behalf of the consumer against the credit cards and bill collectors. Who else can a consumer turn to? A bankruptcy attorney who completly destroys their credit?
By Terry W. @ 07/16/09 01:26:25 AMreport abuse
FH Financial
I just viewed this companies website and see they have more than 50 settlement letters showing their clients success. So I then viewed the OAG's lawsuit posted on the Texas AG website. The lawsuit has to do with marketing claims. I called the AG's office to inquire about how many complaints this company has and I was told none. I continued my research and FH Financial has helped more than 20,000 people. It seems to me they have a very good track record. Does anyone else have any expierance with FH Financial Service of Dallas Texas?
By Al @ 07/08/09 12:31:40 AMreport abuse
"TheCreditCardSolution"
What can you tell me about this company. I can't find anything. I may have looked in the wrong places
By Norman Sears @ 06/28/09 05:17:43 AMreport abuse
Non-profits are the way to go
I was helped over three years ago by a local agency that is a member of National Foundation of Credit Counseling. The counselor set up a debt repayment plan for me and negotiated lower interest rates with several credit card companies but did not erase the outstanding debt. Just getting interest rates lowered helped me repay the debt.
By JC @ 06/15/09 04:26:10 PMreport abuse
Tax
You should talk to a tax adviser about the 1099. The law may have changed, but you could avoid recognizing the income if you were insolvent, which is the case for many of the people these companies are targeting.
By Charlie @ 06/15/09 03:20:27 PMreport abuse
Scum Bags
I have often wondered why some of these fraudulent services have been allowed to operate freely without the law being hot on their heels. I guess the other side of the coin is, how much money should the taxpayer spend protecting really stupid people from their own stupidity. It is not an easy question to answer.
By Buzz G @ 06/12/09 09:05:37 PMreport abuse
phantom income from a 1099
if you are a cash basis taxpayer and used the credit card for business expenses, while it is true the "phantom income" is taxable, you also will then have a comparable business deduction for the business expense portion of the credit card debt relieved. this assumes the business is also a cash basis taxpayer, which means they never deducted those business expenses on their business tax return since they were never paid. Same goes for any interest and late fees on the business portion of the credit card expenses.
By brian @ 06/12/09 07:24:27 PMreport abuse

FH Financial Services

I find it rather strange when you call the President of the company and get a recorded voice message from a programmed voice message receiver and not Mr. Hunt's.
I also keep getting different people that handle my account. Now I am concerned and would like an explanation on a copy of "Power-of-Attorney" that I was told was sent to the bank, the bank says no copy, and I am receiving calls and bills that I SHOULD NOT be receiving at this point. I would like to believe that FH Financial Services are doing their job and doing it within the relms of the law. I would think that if you are assigned to an agent the agent would be competent. The number of the collection company is true and works. Why not for you? What do I do? I am NOT going to get into trouble--I REFUSE.

By Donna @ 12/15/09 09:40:18 AMreport abuse

Bankruptcy

We are trying not to declare bankruptcy; however, I feel they almost make you. We have a motorhome we used for business and it is worth 100,000 less than we could get for it. If we have to declare that as income to the IRS, how do we get out from under? In addition, we owe 60,000 incredit card debt ad we were hoping to negotiate that down. We are both looking for jobs but our income is non existent at this point.

By Kandy Thorson @ 09/28/09 11:46:51 AMreport abuse

The real scum bags

The real scum bags are the credit card companies and their collection agencies. Their abuses are rapent and the government has down little to stop them. They are legalized loan sharks. Debt Settlement companies help consumers by fighting on behalf of the consumer against the credit cards and bill collectors. Who else can a consumer turn to? A bankruptcy attorney who completly destroys their credit?

By Terry W. @ 07/16/09 01:26:25 AMreport abuse

FH Financial

I just viewed this companies website and see they have more than 50 settlement letters showing their clients success. So I then viewed the OAG's lawsuit posted on the Texas AG website. The lawsuit has to do with marketing claims. I called the AG's office to inquire about how many complaints this company has and I was told none. I continued my research and FH Financial has helped more than 20,000 people. It seems to me they have a very good track record. Does anyone else have any expierance with FH Financial Service of Dallas Texas?

By Al @ 07/08/09 12:31:40 AMreport abuse

"TheCreditCardSolution"

What can you tell me about this company. I can't find anything. I may have looked in the wrong places

By Norman Sears @ 06/28/09 05:17:43 AMreport abuse

Non-profits are the way to go

I was helped over three years ago by a local agency that is a member of National Foundation of Credit Counseling. The counselor set up a debt repayment plan for me and negotiated lower interest rates with several credit card companies but did not erase the outstanding debt. Just getting interest rates lowered helped me repay the debt.

By JC @ 06/15/09 04:26:10 PMreport abuse

Tax

You should talk to a tax adviser about the 1099. The law may have changed, but you could avoid recognizing the income if you were insolvent, which is the case for many of the people these companies are targeting.

By Charlie @ 06/15/09 03:20:27 PMreport abuse

Scum Bags

I have often wondered why some of these fraudulent services have been allowed to operate freely without the law being hot on their heels. I guess the other side of the coin is, how much money should the taxpayer spend protecting really stupid people from their own stupidity. It is not an easy question to answer.

By Buzz G @ 06/12/09 09:05:37 PMreport abuse

phantom income from a 1099

if you are a cash basis taxpayer and used the credit card for business expenses, while it is true the "phantom income" is taxable, you also will then have a comparable business deduction for the business expense portion of the credit card debt relieved. this assumes the business is also a cash basis taxpayer, which means they never deducted those business expenses on their business tax return since they were never paid. Same goes for any interest and late fees on the business portion of the credit card expenses.

By brian @ 06/12/09 07:24:27 PMreport abuse

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Jun 12, 2009 -- Debt-settlement firms being targeted by Texas

What others are saying