Credit Card Debt - 2 bad solutions

I have been explorering two possible solutions to my parents credit card debt problem. The first one was to check out a debt settlement company, however after learning how this one company worked, I'm not very sure about ANY debt settlement company now. What I'm about to say about this company only applies to this business and not any others that are out there. I can only speak from my experience in talking with one of their reps (which presented herself in a very sympathetic nature) and the information I found on the internet about them. My mother was the first to call them and after speaking with the rep. she found herself confused on how this program of theirs was going to work. So she asked the rep. to contact me and explain it to me, since I was the one helping her with solving this financial problem. The rep. was more than happy to call and talk to me, which (after the fact) is not really surprising. In our first conversation she introduced herself and ask if I would like her to explain the program to me, I quickly said yes. So here is how this debt settlement program of theirs work, please note the following information is based on the numerous conversations I have had with this rep. just to find out all the little details. It is also pulled from the documention that was emailed to me (Service Contract and Payment Schedule) by this rep.

So here goes, first they find out what credit cards you want to include into the program and then toss out the ones they don't want to deal with (ie Sears). Giving you the reason that Sears refuses to negotiate with them. Then they ask how much is your balance on all the cards they will accept into the program. Once they have that total (lets say $37,000.00), you are then told they can get you 40%-60% off of those balances in a settlement agreement with the credit card company. Sounds great so far, but you don't get something for nothing now do you? As one should expect this company has a fee for it's services, which is not out of the ordinary. Which is calculated as a percentage of the total debt that you are enrolling into the program. Now the rep. tells you that they can have you debt free in 3 years time by following the programs payment schedule. At this point I asked, so exactly how does the program payment scheduled work? She said, instead of sending your monthly (minimum) payment to each of the credit card companies you'll deposit most of it into a Checking / Savings account and save it. This monthly payment was $780.00 or something like. It was just a little over a hundred dollars less than all the monthly minimum payment add together. Which I then told her that it really didn't help the situation at all for my parents, that 100.00 didn't make that any difference since they are short $133.00 everymonth already. Now before I could even ask if they had a longer program time, she says that they have a 5 year plan and the began to give me the new numbers. The new monthly deposit amount would be $476.00 and this made a $400.00+ difference and looked like I found the end of the rainbow finally. I then said, WOW, that would work for them and the rep. immediately said "Great! Should I call your Mom and get them started?". That's when I stopped, and the fantasy begin to dissolve right in front of my eyes. I replied to her that No I still have more questions, like how does the companies fee get paid during all this and that I still need to know all the details and numbers. She said at this point that she would email the Service Contract and Payment schedule to me so I could look over it during the weekend and to give her a call on Monday. I said ok and gave her my email address, she politely said thank you and wished me a good night. This isn't the end of this story, I shortly received that email from her and I just couldn't believe what I saw. (to be continued...)