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Bankruptcy May Be Your Option

Take Caution When Considering Debt Settlement

While the slick radio and web advertising of debt settlement companies promise a smooth road to being debt free in a short period of time, these promises, more often than not are false. Despite the promises of the debt settlement company, consumers usually end up getting sued, stuck with outrageous fees, end up more deeply in debt, and are far worse off in terms of their credit score.

According to the National Association of Consumer Bankruptcy Attorneys ("NACBA"), there is now widespread documentation of the danger that debt settlement schemes pose to consumers. As few as one in 10 unwary consumers who are lured into so-called "debt settlement" schemes actually end up debt free in the promised period of time. The Better Business Bureau has designated debt settlement as an "inherently problematic business." Across the country, the U.S. Government Accountability Office (GAO), the Federal Trade Commission (FTC), 41 state attorneys general, consumer and legal services entities, and consumer bankruptcy attorneys have all uncovered substantial evidence of abuses by a wide range of debt settlement companies.

If you have any questions or if you wish to discuss this case further, please do not hesitate to contact us at 918-236-8385 , or fill out our confidential contact form now.

While Bankruptcy is not a cure all and is not fore everyone, consumers should be very cautious when considering the use of a debt negotiation company. Consumers are urged to steer clear of any companies that:

  • Make promises that unsecured debts can be paid off for pennies on the dollar. There is no guarantee that any creditor will accept partial payment of a legitimate debt.
  • Require substantial monthly service fees and demand payment of a percentage of what they've supposedly saved you. Most debt settlement companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee- a percentage of the money you've allegedly saved.
  • Tell you to stop making payments or to stop communicating with your creditors. While ceasing all communication, for a period of time, is necessary to begin debt negotiation, it will send you down a path from which you cannot retreat. If you stop making payments on a credit card or other debts, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score will also suffer as a result of not making payments. Eventually, creditors will file suit to collect the money that is owed.
  • Suggest that there is only a small likelihood that you will be sued by creditors. In fact, this is a likely outcome. You should expect to have a law suit filed against you. Signing up with a debt settlement company makes it more likely that creditors will accelerate collection efforts against you. Creditors have the right to sue you to recover the money you owe. And, depending on state law, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.
  • State that they can remove accurate negative information from your credit report. No company or person can remove negative information from your credit report that is accurate and timely.

If you are considering debt negotiation, you should understand that you may not be able to reach a settlement will all of your creditors; that debt negotiation can extend over several years; and that many times settled debt resurfaces years down the road through another debt buyer trying to collect the same debt you settled years before. However, most importantly, debt negotiation requires a pot of cash. Discounted settlements require a cash payment, usually wihtin 30 days. It is rare that a consumer has the ability to complete a debt negotiation.

Bankruptcy may not be the answer for you. However, if you are considering debt negotiation, you owe it to yourself to discuss your situation with a competent bankruptcy attorney.

If you or a loved one is considering bankruptcy, we want to provide you with the legal help you need. Please fill out our contact form or call us at 918-236-8385 .

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