I recently heard about a scheme to deal with debt called Debt Negotiation. It is not debt consolidation. Debt consolidation is when you take out a loan and pay off all of your existing debt with this loan. Then the only debt you have is this one loan which has a lower interest rate to help you pay down the debt faster.
Debt negotiation is very different. This site has a diagram of how it works. Basically, the debt negotiation company takes over your bills and you send them an agreed upon amount of money each month. They ignore your bills and wait for the creditors to write off the debt and send it to a collection agency. Meanwhile, the company is saving your payment in an account. The collection agencies are willing to settle the debt for less than the original creditor so the debt negotiation may offer them 40% of the original value to clear the debt. The collector is happy because they collected something. You are happy because your debt is paid off. The debt negotiation company is happy because they collected a fee for doing very little work. The downside is that your credit is wrecked after using debt negotiation because they don’t pay your creditors and instead wait for them to write it off and send it to a collection agency.
Crazy world we live in!