IF you are delinquent on your debts, you may be able to avoid dealing with the bill collectors for a few months but sooner or later, you will still need to face the reality of your debt problems and do something to protect yourself.
For example, creditors will probably wait until you are 60 days late before they hand over your account to their internal collections department. If you’ve had a loss of income, your creditors may even tell you about their hardship program that will allow you to make lower payments at a significantly reduced interest rate.
Others will close your account which means that you can no longer use your credit card until the debt is paid in full. No matter what you are offered by the creditor at this point, however, it is only temporary and will not help you if your hardship continues for longer than a few months.
Once you’re 90 days late, creditors start to become more aggressive. Some creditors will turn the account over to an outside collection agency. Of course, by this time, your debts continue to snowball as the creditors continue to add interest and penalties to the original amount owed. Federal and state collection laws prohibit abusive collection tactics but the reality is that a lot of bill collectors do not follow these laws and will make your life miserable by harassing you for payment.
If the creditor decides that you probably will not pay back the debt, they may write it off their books and report the account as a “charge off” to the credit bureaus. To recoup the creditor’s losses, the account can then be sold to a third-party collection agency who buys the account for a fraction of the original amount owed.
At this point in the collection process, you may be able to negotiate a drastic reduction of the debt amount and pay the creditor 20-50% of the amount owed. Should you do it yourself, hire a lawyer or is hiring a debt settlement company a good idea?
If you don’t feel confident dealing with creditors yourself, you may be tempted to hire a debt settlement company to avoid the expense of hiring an attorney. Don’t do it!
Remember that a debt settlement company cannot legally represent you if you are sued and thus, they cannot protect your legal rights. Also keep in mind that some creditors will flat out inform you that they refuse to work with a debt settlement company and if this happens, that means you leave them no other option but to file a lawsuit against you.
I have seen a lot of unscrupulous debt settlement companies who misrepresent their services to the public and offer false hopes to unsuspecting consumers who are desperate for a solution. A lot of these debt settlement companies do not clearly explain to you how their debt settlement program works before they ask you to sign a contract with them.
These dishonest companies’ advertising sounds so good and once you call them, they often tell you nothing but lies just to suck you in. They do not tell you anything about the potential downfalls of hiring them and often make big promises that they cannot deliver.
Be careful in hiring a debt settlement company or you may end up in a worse situation with your credit with no solution to your debt problems.
If you are in debt and think debt settlement or filing bankruptcy may be a solution for you, we are here to help you figure out your best option. For a free consultation, call my office at Toll-Free 1-866-477-7772 and we will help you step by step in finding a solution that’s right for you. We have offices in Glendale, Cerritos and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.