Two Things To Remember:
- Debt relief companies are simply trying to make a profit;
- Debt relief companies can’t force a creditor to make a deal. These companies have no power to reduce your debt. (All they can really do is ask. And creditors generally say, “no”).
In reality, debt relief companies are focused on the fees you pay, rather than the results they achieve. Individuals are usually worse off afterwards. This should not be surprising, considering how much money these companies spend on cheesy radio and TV ads. Check out the Federal Trade Commission‘s article, below, criticizing such debt relief scams.
How To Recognize a Debt Relief Scam – The Company Will:
- seek to obtain fees up front;
- use scare tactics to prevent you from considering bankruptcy;
- guarantee results;
- tell you they can stop collection calls;
- have no interest in reviewing your financial information;
- use the phrases like “pennies on the dollar”;
- rush you to enroll in their “program”; or
- offer services without explaining the costs.
Whether its a debt relief scam, or some “credit repair program,” these companies prey on individuals’ fear. In particular they want you to be afraid of bankruptcy.
Bankruptcy – The Legitimate Alternative
A primary purpose of bankruptcy is to provide individuals with a fresh start. And bankruptcy possesses the actual legal power to permanently discharge (wipe out) debts. Commencing a bankruptcy proceeding triggers a legal injunction, thereby halting all collection activity (this is called the “automatic stay”). At the conclusion of most bankruptcy cases, debts are routinely discharged, without creditors’ consent. This is the power of bankruptcy.
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Creditors Don’t Want You To File.
Creditors don’t want you to consider bankruptcy. They would much prefer that you enroll in a some debt relief scam, because then you’ll remain on the hook to them. The last thing a creditor wants is for you to legally discharge their debt in bankruptcy.
Bankruptcy – What To Expect
If you consult with a qualified bankruptcy attorney, your attorney should be able to quickly explain the following:
- your available bankruptcy options (chapter 7 vs. 13, or chapter 11),
- whether you qualify for bankruptcy and whether you should file, and
- the likely benefits that bankruptcy may offer you.
- Modify a mortgage,
- Modify a vehicle loan,
- Stop a repossession,
- Stop a wage garnishment, or
- Stop a collection lawsuit.