If you are behind on your debts you are probably receiving more than your fair share of demanding letters and phone calls from collectors/creditors and even attorneys. I am sure that the thought of filing bankruptcy and getting rid of your debts can be quite appealing. But before making a decision to pursue that route you should consider your alternatives.
Informal Methods of Debt Resolution
If your financial problems are only temporary (like the COVID 19 crisis), you may want to ask creditors to accept lower payments or to schedule payments over a longer period of time. May creditors are offering temporary relief during the crisis. In addition, creditors may be willing to work with you to avoid the difficulties of a court proceeding to collect on the debt, which can be time-consuming and expensive.
You don’t need a consolidation company to do this work for you. Some so-called “credit counselors,” or “debt consolidation companies”, prey on overwhelmed consumers, promising “a clean slate,” often for a flat, up-front fee. They may promise to contact creditors and convince them to accept lower payments or to charge lower fees and interest rates. In many cases, unfortunately, the only ones who end up in better financial shape as a result of these “efforts” (or the lack thereof) are the counseling organizations themselves, while the consumers are left with even fewer resources as a result of high fees and more delinquent debts.
Beware of Scams
Although reputable credit-counseling agencies that actually provide valuable services to financially overwhelmed consumers do exist, vulnerable debtors often fall prey to less scrupulous services. Tips that can help you avoid the scams include:
Beware of promises that sound too good to be true; claims of helping you “get out of debt easily” are a red flag
Deal with a reputable agency by checking with state consumer agencies and the local Better Business Bureau to make sure there have been no or few complaints against the organization, and that the complaints that have been raised were favorably resolved
Verify that the organization provides counseling and education, as well as debt consolidation and payment services, to help consumers achieve financial stability and remain debt-free
Carefully read through any written agreement that a credit counseling organization offers to make sure it describes in detail the services to be provided; the payment terms for these services, including their total cost; how long it will take to achieve the desired results; any guarantees offered; and the organization’s business name and address. Have a lawyer review this document
Confirm payments with creditors. Some debt repayment services require the consumer to periodically send it a lump-sum check that it divides among the creditors. Debtors who enter into these types of arrangements should verify with their creditors that the payments are actually being made.
If instead your financial troubles are long term or your creditors will not agree to an alternative payment plan, bankruptcy may be the best way for you to get out from under an insurmountable debt load. Bankruptcy can be the right option to enable you to make a fresh start. Talking through these options with our office can help you make the best decision during this very stressful time.
If you or anyone you know would like help with unmanageable debts, unpaid debts, harassing creditors, lawsuits and garnishments for unpaid debts, or any other debt relief, The Santos Law Offices, PA can help. Call to schedule an appointment today at: 866-661-3816. We continue assisting clients via telephone, email and video conference during the COVID 19 crisis.
DISCLAIMER: This blog and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent counsel for advice on any legal matter.