I gave what I thought was bad advice. Turned out to be the best advice I've ever given.
Around the start of 2025, a woman named Pamela came to me with a problem. She had about $45,000 in credit card debt spread across seven cards. Her credit score had dropped to 612. She'd missed three payments on one card after a medical emergency. She was drowning.
She'd gotten an offer from a debt settlement company. They promised to "settle" her debt for around $22,000, which she'd pay over four years. Monthly payment: around $460. She was ready to sign.
I told her not to.
Debt settlement companies tell you to stop paying your credit cards. Then they negotiate with creditors for a lower payoff. But in the meantime, your credit score tanks. Late payments pile up. You might get sued. And the settlement company takes a cut — typically around 20-25% of the settled amount.
Pamela's credit score was already hurting. But if she'd gone through settlement, it would have dropped to around 500. She'd be unable to rent an apartment or buy a car for years.
Instead, I gave her a different plan. I told her to call each credit card company and ask for hardship programs. She did. Two of them lowered her APRs from around 25% to 12% for 12 months. One agreed to a payment plan with no interest for 18 months. The others didn't budge, but the ones that did saved her around $200 a month in interest.
I also helped her build a strict budget. No eating out. No streaming services except one. No new clothes. She hated it. But she stuck to it.
Eight months later, she'd paid off two of the smaller cards. Her credit score had climbed to 665. She qualified for a debt consolidation loan at 14.9% — not great, but better than the 25% on most cards. She took it. Monthly payment: around $480 for four years. Total interest around $11,000. Compare to the settlement offer: she would have paid around $22,000 and destroyed her credit.
She called me the day she paid off the first card. She was crying. I pretended not to notice.
Look, debt settlement companies aren't all evil. For someone already in bankruptcy territory, they might be the only option. But for Pamela, it would have been a disaster. Walking away from that offer was the best thing she did.
Pamela is now debt-free except her mortgage. She sends me an update every three months. Last week, she told me her credit score hit 740. She's thinking about buying a new car next year.
I will keep posting updates on this. Check back soon.
P.S. I forgot to mention — the debt settlement company called her six times after she said no. They used high-pressure scripts, told her she was "throwing away money," and tried to guilt her into signing. That's how you know it's a bad deal. When someone has to convince you that hard, run.