By John G. Merna, Esq.

Let’s face it bankruptcy is never anyone’s first choice. Although that’s primarily because they don’t really understand it.  Naturally, most people’s first inclination is to halt and get the hemorrhaging under control.  With that thought in mind, many people reach out to one of the many “debt settlement” or “debt relief” programs that advertise heavily on TV and on the internet to people in financial distress.  Many have aggressive direct-mail campaign to financially stressed or delinquent borrows based targeted mailing lists purchased from the major credit bureaus.

It Is What They Don’t Tell You That Cost You Time & Money

The truth is debt relief and debt settlement companies already know you are going to fail.  Two things you can be sure of. One, they will get paid before you realize the program won’t work.  And two, you will have little time to react because the lawsuits and even garnishments will be upon you.  Before you sign-up for one of these debt relief or debt settlement companies read this blog in full.

Our Program Only Works For A Small Number People

Unfortunately, these programs flourish and make millions of dollars by not telling you one important thing. The first ugly secret is their programs only work in a very small number of cases. The typical model these debt settlement companies follow is they offer to put you on a payment program to settle out your debt over a period of time. 

We Need You To Sign Up Or We Don’t Make Any Money

The payment that you will make will be affordable.  Why? Because the debt settlement company doesn’t make any money if you say “No”. So the second ugly secret is that “we (the debt settlement company) don’t make any money unless we trick you into signing up and paying. So surprisingly the payment you need to make is something that you think you can afford. 

How The Program Is Structured

The debt settlement program will be sold to you this way.  They will tell you the debt will be paid-off through settlement over a 48-month period or so.  They promise to give you a monthly payment amount that is manageable.  So the idea is you are paying into this account and as the creditors come forward they will settle out the debts one at a time.  And while this is going on they tell you to refer all your creditor’s calls to them.  Sounds easy.  Of course … not. It is what they don’t tell you that costs you money and time.

Virginia Beach, Richmond, Newport News, Chesterfield, Henrico, Chesapeake, Norfolk, Portsmouth, Hampton bankruptcy lawyer, cheap bankruptcy

Why The Program Does Not Work

They don’t tell you that the payment that you’re making is not large enough to quickly accumulate a sufficient amount of money to settle out the debt in a timely manner consistently. They don’t tell you that you might be able to settle the first creditor that comes forward in the first six months with the funds accumulated.  And generally that is not one of your largest creditors.   But once the accumulated money is depleted on that settlement all the other creditors have to wait another six months to gather enough money for another settlement.  Ultimately, what happens is the whole program feels at around 12 months when the other creditors who have waited a year find out you don’t have the money and they’re no longer willing to stand in line. At that point they start to opt out of the program and begin to sue and garnish you. 

So in the end what these debt settlement agencies don’t tell you is that their program will fail because you mathematically cannot accumulate the money fast enough to settle out the debts quick enough to keep the creditor happy.  Your creditors will not wait long enough for you to get to all of them before one or more is going to ruin the effort by suing you and garnishing your wages. 

And the biggest scam is it doesn’t matter whether you succeed or fail to the debt settlement company because they get paid first whether you fail or quit.  Yes, you can quit the program at any time but they forget to mention to you that they get paid even if you cancel,

The true scam is that on the day you contact them they can mathematically tell you the chances of your success or failure to within a percentage point based on their history of success, your income, the amount of debt, your creditors, and their history of working with your creditors.  

I have lost track of the amount of clients that have come to my office after 6 to 12 months of paying a debt settlement program only to be sued and threatened with garnishment by a creditor that was “in the program”.  The average client loses approximately $3000 towards these payments.  Definitely money they could have put to better use.

Whether you should try debt settlement or file bankruptcy is a very simple math decision. The first variable is X= the fastest way to recover your credit and protect your income.  If your credit score is so low then you have to question the value of trying to pay people off with money you don’t have over a period of time you can’t wait then, you know that X= Bankruptcy.  Don’t struggle against the myths of bankruptcy because the reality is you can buy a house within two years (see our blog).  Bankruptcy is not the end of your credit.  

To help my clients to understand the power and value of bankruptcy I often ask them “Is your credit score of 500 worth the $30,000 in principle, interest, late fees, and legal costs to pay off the debt over the next five to ten years?”  Ultimately, bankruptcy is a faster, cheaper, and easier route to financial/credit recovery.  Like I said, the math is simple when you lay out all the variables.  Thanks for reading.

For additional reading on this topic you should check out Forbes Magazine’s article, “5 Reasons Debt Relief Programs Cause More Pain Than Relief”


Lexington Law, National Debt Relief, Clear One Advantage, Freedom Debt Relief, debt settlement attorney, tax debt relief, 


Virginia Beach, Portsmouth, Chesapeake, Norfolk, Suffolk