IN SEEKING relief from debt problems, a lot of people are tempted to hire the services of a debt settlement company. These people often think that this is a better option than filing for bankruptcy. Sadly, sooner or later (after losing hundreds or thousands of dollars), they find out the hard way that hiring a debt settlement company was actually the worst decision that they ever made.
Most people are not aware that when you call a debt settlement company and they ask you to speak with a "certified credit counselor", this person that is supposedly "counseling" you is actually nothing more than a sales representative whose job is to sign you up and close a sale. This person does not have your best interest in mind. These so-called "certified credit counselors" are not certified by any government agency. They are often paid on a commission basis by their employer with bonuses awarded for the number of new clients that they bring in every month.
As soon as you fill out an enrollment application, the hard selling begins. Based on how much they believe you can afford, they calculate a small payment for each of your accounts. The company then adds their monthly service fee in order to reach the required monthly payment you have to make to them. Often they will offer you 24, 36 or 48 months to pay. After you sign the agreement, they then tell you that your monthly payments do not get sent to the creditors right away. Instead, they go into a client trust account until enough money is accumulated to settle all your accounts at once. Oftentimes, the company will charge you several non-refundable fees which includes an up-front fee, a set-up fee and in many cases, a monthly "maintenance" fee. And if you don’t read the contract that they make you sign, you may not even be aware that your first several months of payments will simply go to these fees that I mentioned above. In other words, the company makes sure that it gets paid first before you start accumulating money in your account to pay to your creditors.
Once you’ve signed the contract, the debt settlement company will then advise you to quit making your monthly credit card payments. They will then tell you that they will "take care of your creditors" because they will send your creditors a letter saying that you are on a debt settlement program.
What you will find out, however, is that once you quit paying your creditors, your phone will never stop ringing. Bill collectors will start hounding you day and night. You can also be sued and your wages garnished. When you call the debt settlement company for help, they will remind you that you signed an agreement stating that they are not attorneys and therefore cannot give you legal advice. Once your life becomes hell and you can no longer handle the stress level, you will then be forced to consult with a bankruptcy attorney. After paying the debt settlement company for several months, they will tell you that the fees you paid are non-refundable and therefore you are not getting a penny back.
Most people who hire a debt settlement company will drop out of the program within the first year because they cannot handle the stress of dealing with creditors. And if you get sued, of course, most likely you will end up filing bankruptcy in order to avoid a wage garnishment.
If you are thinking of hiring a debt settlement company to help you with your debt problems, be very careful. There might be a few legitimate companies out there but every single day, I hear horror stories from people who have lost thousands of dollars to debt settlement companies. These people tell me that had they known the truth about most debt settlement companies, they could have spared themselves from a lot of stress, aggravation and frustration. For a free consultation so that we can help you evaluate all your options in getting out of debt, call Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos , West Covina 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 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 June 30 in Asian Journal Los Angeles p. B2 )
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