Does anybody know more about this? I've seen ads for places like that and they set off my scam-o-meter, but I've never dug in to see how he scam worked.
You pay them a big fee, upfront (they know you have debt repayment issues, they're sure as hell not going to risk not getting -their- money), they contact your creditors with a form letter saying that they are authorized to act on your behalf and any communications should be through them (this is the biggest relief most people find, the phone calls, letters, all stop).
But then you get burned, because they settle all your debts, just as you could have yourself, and your credit is (even more) toasted, because yes, you'll pay less, but everything on your credit record is marked as 'settled' rather than 'paid in full'.
They have some emotional distance and apathy regarding the negotiation that might help, but there's nothing magical that they do that you yourself could not.
True. Actually, the majority of consumers that go through debt settlement end up bankrupt anyway. Some blame the fees, but I don't have data to substantiate that.
