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The Debt Business

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Stacy Perman

The Debt Business

With consumer debt and bankruptcies on the rise, so is business for firms specializing in credit counseling, debt and budget management, consolidation, or debt settlement. These outfits typically charge a fee that can range anywhere from 10 to 60% of the outstanding debt. Julie Leineke, managing partner at Nationwide Debt Settlement in Phoenix, says her business has doubled every six months since the firm opened about four years ago. Nationwide is so busy that it recently hired five new staffers. "Debt settlement is more popular now because more companies and people are reaching out for help," says Leineke. If the economy continues to plunge, Leineke says, "we will see astronomic growth." Unfortunately, there has also been a rising tide of fraud associated with this industry. Legitimate businesses usually belong to an association such as the Better Business Bureau or the International Association of Professional Debt Arbitrators and—significantly—do not take fees for services upfront.