ARE you thinking of hiring a debt settlement company to help you get out of debt? Were you told that this was a better alternative to filing for bankruptcy? As the economy continues to decline, more and more people are turning to debt settlement companies for help in eliminating their debts. Warning: Be very careful. As a bankruptcy attorney, I have seen a lot of people who have become victims of deception and misrepresentation by unscrupulous debt settlement companies.
Don’t get me wrong, there are some debt settlement companies that are completely legitimate. However, a lot of them are also just out there to scam people. I have heard a lot of horror stories about them from people who have come to my office for advice. These fly-by-night companies misrepresent the nature of the services they are offering, don’t tell you what you need to know and are simply interested in taking your money without actually helping you. They often prey on desperate consumers who see no way out of their debt problems short of filing bankruptcy. But instead of seeing light at the end of the tunnel, a lot of their victims find themselves hitting a brick wall instead. Don’t be one of these people.
One person who came to me recently for bankruptcy advice told me how she paid one company almost $700 per month for 9 months while she continued to receive bills and collection letters from her creditors. She was under the impression that once she started paying the debt settlement company, her creditors will be contacted immediately and that she didn’t have to worry about being sued. Sure enough, her biggest fear just happened. She recently got sued by one of her creditors and now they are trying to garnish her wages. She came to me to file for bankruptcy and stop the wage garnishment. After paying the debt settlement company more than $6,000 over the last 9 months, none of her debts have been settled. When she tried asking for a refund, they wouldn’t even return her phone calls. Apparently, most of the money she paid the company only went to pay their fees although they absolutely did nothing for her. Now she even owes a lot more to her creditors after they’ve added interest charges, penalties and now- also collection costs.
Misinformation is the number one tool of deception used by fraudulent companies because a lot of people who sign up for their program don’t even understand what they are getting into. For example, they don’t know that their credit will continue to get trashed while their accounts go to collection and that they can be sued by creditors. If a debt settlement company offers you a payment program of several years (sometimes 3-5 years), this may sound great but trust me, chances are that some of your creditors will not wait that long to collect their money. The debt settlement company is only offering you a 3-5 year program to lower the monthly amount they will collect from you every month (otherwise they can’t probably convince you to sign up if they quote you a payment you can’t afford) but remember- the longer you take to pay, the bigger the chances are of being sued by your creditors. If you do get sued, what will you do then? Will you file bankruptcy anyway? If so, then what’s the point of doing debt settlement in the first place? My suggestion to you is that before signing up with a debt settlement company, consult with a bankruptcy attorney first to find out all your options. It doesn’t make sense to pay thousands of dollars to a debt settlement company only to be forced into bankruptcy anyway once a creditor files a lawsuit.
For a free office consultation, please call Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos and West Covina.
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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 over 4,000 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.
( Published November 4, 2009 in Asian Journal Los Angeles p B3 )
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