Debt Settlement Tops, Study Finds

Debt Settlement offers the most of any debt relief service, a study finds.

The study, conducted by Southern Methodist University professor Richard Breisch, says debt settlement provides the greatest value among the several types of debt relief programs. Debt settlement accomplishes its aims by attacking the principal on the debt.  

“However, the consumer welfare analysis suggests that DSPs create the greatest consumer welfare of any approach,” the study concludes.

The study found that 57 percent of clients get an offer to settle 70 percent of their original deg. Almost 30 percent settled for 90 percent of the original debt, the study found. Payments to  Consumer Credit Counseling can exceed the original debt by an average of 29 percent. The debt settlement provider has a higher value for high dollar debt.

The report advocates more transparency and information for consumers, monthly savings requirement, various account protections, and require financial education for the consumer.

The survey was put together at the request of the Americans for Consumer Credit, an organization that advocates for more free market solutions in the credit industry on behalf of providers of consumer products.