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Archive for the ‘Debt Settlement Services’ Category

What Are the Risks of Working with a Debt Settlement Company to Resolve My Debt?

July 13th, 2020 at 10:46 pm

TX bankrutpcy lawyer, Texas debt attorney, The words “filing for bankruptcy” can be enough to send those struggling financially into a full-blown anxiety attack. You may be thinking about the dramatic television depictions of bankruptcy, with peoples’ belongings being publicly advertised for sale and everyone becoming aware of their financial destitute. Because of these dramatizations, many will seek alternative options for paying off their massive credit card debts. No one wants to find themselves in the situation where bankruptcy is their only option; however, these alternatives can be more harmful to your credit than properly filing for bankruptcy. Debt settlement companies are a commonly advertised substitute, but the promises are often too good to be true.

What Is a Debt Settlement Company?

A debt settlement program is one sponsored by a for-profit company with the promise that they will work with your demanding creditors to negotiate a viable settlement for you to resolve your past-due payments. This settlement will be a lump-sum amount that is less than your total debt owed. Since it is unrealistic that you would have this money on hand, you will be asked to set aside a fixed amount every month into a savings account. Once the sum totals the settlement that they negotiated, you will pay the settlement amount. These companies or programs often tell their clients to halt their monthly payments to their creditors as they gather their settlement funds in their savings account.

The Risk You Take

As is the case with any financial decision, it is critical that you are fully informed of the potential risks that you may face if you decide this is the route that you would like to take.

  1. Unrealistic Expectations: These companies have terms and conditions required of their clients, including a time period that they must continue to set aside funds. Many of these programs require money to be deposited into their savings account, consistently, for 36 months or more. This can be a difficult requirement to meet since your financial situation can greatly change over three years. It is important to read these fine print details before signing up because you may end up dropping out for failure to meet them, leaving you in the same financial spot as you were when you signed up for the program.
  2. Empty Promises: There is no guarantee that their negotiations will stick. Many creditors may not agree to their negotiations, and after three years of saving, you may still owe the full amount. Debt settlement programs also tend to negotiate smaller debts first, allowing your larger debts to continue racking up interest and fees that you will need to pay later on.
  3. Faulty Advice: As previously mentioned, many of these programs encourage their clients to stop all payments to their creditors as they save on the side. This can have a negative impact on their credit score and have you accruing a high amount in late fees and other penalties.

Call a New Braunfels Bankruptcy Alternatives Lawyer

Unfortunately, some companies offering debt settlement programs fill their clients with empty promises. These programs may charge fees before any of your debts are settled and improperly advise you on your communication with your creditors, leaving your credit score in shambles. Before making any decisions regarding how you intend on paying your creditors, you should speak with an experienced attorney. At the Law Offices of Chance M. McGhee, our bankruptcy lawyer advises his clients on how to make up for their debts, providing them with information about bankruptcy and valid alternatives. We work tirelessly to help our clients move forward from their financial burdens while steering clear of scams and empty promises. For help determining your path of recovery, contact our San Antonio bankruptcy attorney at 210-342-3400 for a free consultation.

 

Source:

https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt

 

 

Lawsuit Highlights the Issues with Debt Settlement Services

August 27th, 2018 at 4:44 pm

Texas bankruptcy lawyerRecently, the Consumer Federal Protection Bureau (CFPB) initiated a lawsuit against the nation’s largest debt settlement services provider, Freedom Debt Relief. According to the claims, this formerly well-regarded company was not telling the truth as far as their fees and the reach of their capabilities. Unfortunately, this is not the first, nor the last debt settlement company openly deceiving clients to earn their trust and boost their profits. These are a few of the top complains that surfacing from the litigation.

Debt Settlement Promises Are Misleading

Clients complain that Freedom Debt Relief led them to believe that all of their debts were negotiable and would settle within months. Unfortunately, debt settlement services do not have the capabilities of stopping collection attempts. Therefore, many clients continued experiencing harassing phone calls, emails, and postal collection attempts, many of which went further into collections or resulted in judgments. Filing for bankruptcy is the only method that places an automatic stay on all collection attempts; meaning, foreclosure, repossession, and harassment all must come to an abrupt stop.

Clients Experienced Deceptive Practices

Many customers claim Freedom Debt Relief verbally agreed that they would negotiate all of their debts; yet, sources show the company had prior knowledge that several companies already refused to consult with their company, regardless of the client. In the debt settlement options, creditors examine each offer on a case-by-case basis and choose whether or not to negotiate. Bankruptcy does not give any creditor the authority to refuse, except on disallowable debts. If your debt is not allowed in the bankruptcy, your attorney will let you know before beginning the filing process.

Freedom Debt Relief Lied About Fees

All debt settlement companies receive payment based on the portion of any amount they convince a creditor to forgive or reduce. One of the significant complaints emerging from the lawsuit was customers realized the company assessed additional fees, including when a creditor voluntarily gave up collection attempts without Freedom’s involvement. Debt settlement services nickel and dime their payments, making it impossible for clients to know how much they should expect to pay the company. Attorney Chance M. McGhee lets each of his clients know how much they can expect to spend, leaving little room for surprises.

Get the Reliable Results You Need

A significant number of bankruptcy filers began by trying debt settlement first. Unfortunately, the complaints are consistent, regardless of their chosen company: the process takes too long and ultimately costs too much. If you decide to file for Chapter 7 or Chapter 13 bankruptcy, you will see results in months, not years. A Schertz, TX bankruptcy attorney will give you honest representation with no hidden surprises. Law Offices of Chance M. McGhee has decades of experience assisting clients through the bankruptcy process and earning them the financial freedom their families needed. Let us earn your trust today. Call us at 210-342-3400 to find out how bankruptcy can benefit your family in a free no-obligation consultation.

Source:

https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-freedom-debt-relief-misleading-consumers-about-its-debt-settlement-services/

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