Almost every week, my office gets phone calls from people in debt who have been taken advantage of by so-called “debt settlement companies”. These are the companies who advertise on TV, newspapers and on the internet who tell people that their debts can be settled for “pennies on the dollar” and that they should avoid bankruptcy as this is a “better option than bankruptcy.”
Buyer beware: More often than not, people who hire these companies end up in a much worse situation than when they first started and after losing thousands of dollars, they don’t get the results that they were promised.
If you are delinquent on your debts, you may be able to avoid dealing with the bill collectors for a few months but sooner or later, you will still need to face the reality of your debt problems and do something to protect yourself.
For example, once you’re 90 days late, creditors start to become more aggressive. Some creditors will turn the account over to an outside collection agency. Of course, by this time, your debts continue to snowball as the creditors continue to add interest and penalties to the original amount owed. Federal and state collection laws prohibit abusive collection tactics but the reality is that a lot of bill collectors do not follow these laws and will make your life miserable by harassing you for payment.
Once you are more than 180 days past due, If the creditor decides that you probably will not pay back the debt, they may write it off their books and report the account as a “charge off” to the credit bureaus. To recoup the creditor’s losses, the account can then be sold to a third-party collection agency who buys the account for a fraction of the original amount owed.
At this point in the collection process, you may be able to negotiate a drastic reduction of the debt amount and pay the creditor 20-50% of the amount owed. Should you do it yourself, hire a lawyer or is hiring a debt settlement company a good idea?
If you don’t feel confident dealing with creditors yourself, you may be tempted to hire a debt settlement company to avoid the expense of hiring an attorney. Don’t do it! Remember that a debt settlement company cannot legally represent you if you are sued and thus, they cannot protect your legal rights. Also keep in mind that some creditors will flat out inform you that they refuse to work with a debt settlement company and if this happens, that means you leave them no other option but to file a lawsuit against you!
I have seen a lot of unscrupulous debt settlement companies who misrepresent their services to the public and offer false hopes to unsuspecting consumers who are desperate for a solution. A lot of these debt settlement companies do not clearly explain to you how their debt settlement program works before they ask you to sign a contract with them. Their advertising sounds so good and once you call them, they tell you nothing but lies just to suck you in. They do not tell you anything about the potential downfalls of hiring them and often make big promises that they cannot deliver. Be careful in hiring a debt settlement company or you may end up in a worse situation with your credit with no solution to your debt problems.
If you are in debt and think debt settlement or filing bankruptcy may be a solution for you. For a free consultation, call Toll-Free 1-866-477-7772. Let us evaluate your situation and recommend possible options. We have offices in Glendale, Cerritos, West Covina, Valencia and Riverside.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.