Bankers Hate Debt Settlement Outfits

Bankers hate debt settlement. The seven biggest groupts of bankers all sent a letter to Congress in February 2026 asking for stronger regulation of the outfits doing debt settlement. The bankers says that those settlement plans “take years to complete, if ever.”

Now if you are in financial trouble, the bankers are not your friend. So why am I pointing this out?

The American Bankers Association asks Congress to crack down on debt settlement outfits

Many people who sign up for debt settlement think it’s somehow better or more honest than filing for bankruptcy. But the bankers don’t. So who exactly will think better of you because you tried it? I’ve never met anyone who had an answer to that.

The bankers’ letter sent me to a 2021 study paid for by those settlement people. That study shows that most people who file Chapter 7 bankruptcy clear 90% of their unsecured debts. (Most people who file Chapter 13 clear about 60% of their debts.) And most people who go with debt settlement only settle about half their debts, and only reduce those by about a third! Finally, only about one person out of four actually finishes the settlement program. That’s from the study those guys paid for.

Update: Congressional Testimony

The American Financial Services Assocation had surprisng testimony to Congress in July 2026. They said using a debt settlement company hurts your credit score five times more than filing bankruptcy! “Consumers who were current when they enrolled saw their median credit scores fall 96 points (from 645 to 549)16 between six months before enrollment and six months after – nearly five times the 20-point decline experienced by bankruptcy filers over the same timeframe.” That’s based on a study by TransUnion.

Conclusion

If you can take care of your personal obligations and pay your debts, pay them. If you can’t, then talk to a bankruptcy lawyer. Nobody is going to respect you more if you try debt settlement first. Not even the bankers.

Meet Vanessa, Lexria & Jubilee Key

Meet Vanessa, my Paralegal

Vanessa Hill, bankruptcy paralegal, has worked for me for twenty years. She will get your credit report (when you give us permission) and she will set up our next meeting.

Meet Lexria, My Virtual File Clerk

Lexria, is my virtual file clerk. She can’t answer legal questions, but she is really good at getting the necessary information and bankruptcy required documents.

Meet Jubilee Key, my document manager

Jubilee Key is my document manager. She will send you our final papers for approval after we go over them, and then send them to the court. But her first job is to get your permission, so Vanessa can get your credit report. So look for an email from Jubilee.