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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

 

 

Are There Alternatives to Bankruptcy?

May 15th, 2015 at 9:04 pm

Texas chapter 7 lawyer, Texas chapter 13 attorney, Texas bankruptcy attorney,If you are considering bankruptcy, then you probably have several questions and concerns related to the bankruptcy process. There is no doubt about it: Filing for bankruptcy is a serious decision that can affect your personal and financial opportunities.

Here are the answers to three common questions about bankruptcy:

What Are the Alternatives to Filing for Bankruptcy?

In many cases, filing for bankruptcy is a smart decision that puts debtors on the path toward a debt-free life. However, it may not be the only option. Sometimes, aggressive budgeting and smart financial planning are enough to pay off debts.

Each case is unique, and there is no one-size-fits-all solution to repaying debt. Before you decide to file for bankruptcy, you should discuss the options with an attorney. Credit counseling services may also be helpful.

Will Bankruptcy Destroy My Credit?

According to the Federal Trade Commission, bankruptcy will stay on your credit report for as long as 10 years. Though this may seem like an eternity, many people do see their credit score steadily improve after filing for bankruptcy. Bankruptcy may impact your credit score, but refusing to address your debt is an even worse decision.

Will I Lose My Home during Bankruptcy?

Depending on the chapter they file, some debtors face foreclosure. Filing for chapter 13 bankruptcy is one way to maintain your home.

Chapter 13 bankruptcy involves the creation of a repayment plan, so it allows debtors to keep both their dischargeable and non-dischargeable assets. However, chapter 7 involves the liquidation of assets, and filing this chapter could lead to foreclosure.

Choosing which chapter to file is one of the most important steps in the bankruptcy process. Your income and several factors will affect this decision. An experienced bankruptcy attorney can recommend a bankruptcy chapter that would be ideal for your particular case.

If you would like to speak with a San Antonio bankruptcy attorney, contact the Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.

Call today for a FREE Consultation

210-342-3400

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