Credit issuers avoid working with debt settlement companies

While consumers continued to suffer from credit card debt, unemployment, foreclosure and other ailments over the last year, this did not stop credit card companies and debt collection agencies from filing a greater number of lawsuits against individuals in 2010.

Recent reports indicate these cases have quadrupled in state courts in California, but in many cases, banks and lenders will offer to work with consumers to alleviate debt.

However, consumers should be wary of contacting a debt settlement agency, as many financial institutions will refuse to work with these groups. For example, Paul Hartwick, a spokesman for Chase Card Services, says his company operates under this policy due to recent Federal Trade Commission regulations, The Santa Cruz Sentinel reports.

Hartwick says his company offers consumers the ability to reduce their interest rates and opt of late and over-limit fees through the courts, but that those who attempt to bring a debt settlement company in the court discussion could lose out on this type of deal, according to the news source.

As an alternative, consumers could benefit by looking into a credit counseling agency if they receive a court summons.