“Don’t ruin your credit by filing bankruptcy!” say those who run a debt settlement scam.
“The secret the credit card companies don’t want you to know!”
“Don’t file chapter 7 bankruptcy!”
“If you owe at least $10,000 in credit card debt, you are eligible for our program!”
“Recent changes in federal law require credit card companies bailed out by the federal government to settle their debts with you!”
Hey, when something sounds too good to be true, it usually is.
Most recently, the Minnesota Attorney General sued six of these outfits
My position has always been, bankruptcy is a last resort.
Let me share some of the disasters my clients have suffered with these “miracle” programs.
This is how they operate.
They are usually not located in the state you are in, so they are hard to hold accountable for refunds or lies.
Their ads and websites and phone calls trumpet their success, but the contract you sign NEVER guarantees anything.
You send them money, usually they require that you authorize it to come right out of your bank account, and they do not even deal with your creditors until they have a certain amount from you.
It may take months, years, before they have enough from you, after deducting their fees, of course, to even answer the phone when your creditor calls.
And, the creditors do not wait for the debt settlement company, they just sue you, garnish your wages in states that allow it, like Michigan.
Of course, you are behind on paying all your credit cards, because you are sending what you have left every month to the friendly debt settlement company.
And/or, they told you: stop paying the credit cards.
So, your credit report is taking the hit for being in default, the hustler/con man debt settlement company has your money, and you have no relief.
In fact, you are getting harassed more than before you hired them.
I represented one couple, in their 80s, who were so ashamed of their debt problems, they did not tell anyone.
Their kids were helping them out, and they hired two of these debt settlement scam outfits, to handle one credit card each.
After over six months of paying, all they had to show for it was a lawsuit against them by each credit card company.
Sure, sometimes you send enough money that they can make a deal to reduce your debt.
Then, you get a 1099 income tax form for.
Get your financial information in order and check with a lawyer before falling for one of these scams.
Bankruptcy, Or Debt Settlement Scam?