Are debt settlement agencies a good idea?


If you are considering debt settlement as a way to deal with excessive debt, I would urge you to consider the fact that debt settlement almost never works and results in nothing more than wasting thousands of dollars at the very time when people need that money the most, be it to provide for their family, or to pay for debt elimination methods that actually work, such as filing bankruptcy in federal court.

Debt settlement is actually ILLEGAL in Missouri! That's how bad it is!

Debt settlement companies have gotten so bad that they are essentially illegal in Missouri. State Attorney General Chris Koster is aggressively prosecuting them to drive them out of business, but like cockroaches they seem to be everywhere.

There is a notable exception to this law which actually allows ATTORNEYS to do debt settlement. Now why is this? Is it because attorneys have their hands in the pockets of the lawmakers? Is it because attorneys have special powers that allow them to settle debts which non-attorney companies cannot?

NO!!!!!!!!

The reason why attorneys like me are allowed to help people settle their debts while it's illegal for anyone else to do so is because attorneys have a tremendous amount of specialized education, have to pass a bar exam, and we are held accountable to our peers and the state bar if we tell people anything which is untruthful. Attorneys like myself are required to look out for our clients, and I'm telling you, although there are some bad eggs, the vast majority of attorneys are 100% ethical and are looking out solely for your best interest as a client. An attorney will not tell you that a debt settlement plan is likely to work unless they know in their professional experience that it will. Non attorney companies will flat out lie to you and tell you whatever it takes to get your money. It's that simple.

Also, attorneys like myself will only settle a debt or debts if the plan is likely to succeed.

And guess what? The only time I help people settle debts is when they can come up with 40-60% of the total amount owed in a relatively small amount of time. This obviously only works for certain people who have certain financial conditions which allow them to do this. Most people who are highly in debt, such as $8000 or more, simply do not have the assets or income to make debt settlement work. Plus debt settlement is more likely to fail if you have multiple accounts because all the creditors don't have to go along with it. One creditor failing to go along will often spoil the whole plan and you end up still deep in debt.

There is another alternative that I offer to people quite frequently if they just have one debt or perhaps if their debts are relatively manageable but they have been sued and don't want to get a judgment against them and garnishments. These people have been sued, but they don't really have enough debt to justify filing bankruptcy. Often they just have one debt that has gotten out of control. What I do for these clients is negotiate favorable payment terms that keep creditors from garnishing wages and bank accounts, low monthly payments that people can actually afford. This is one area where attorneys truly can negotiate and obtain repayment terms that people simply cannot obtain on their own. Many times people who have been sued will get tricked into agreeing to a judgment against them in exchange, supposedly, for not having to show up to court. If you try to represent yourself in a state court lawsuit, you are likely going to get railroaded with difficult repayment terms they know you can't afford, or worse yet they'll just trick you into consenting to full repayment immediately and then just garnish the maximum legal amount from your bank accounts and wages. Don't let this happen to you if you face this kind of situation. Talk to me or another attorney who can explain your real legal options with regard to this debt lawsuit, and advise you on the best possible course of action.

I can't tell you how many good people have come into my office feeling frustrated, discouraged and taken advantage of because they signed up with a Debt Settlement company. Quite simply, debt settlement is a complete scam. Companies that promise they can settle any or all of your debts are out for only one thing: to get your money. People come into my office having paid $100, $300, even $800 per month to debt settlement companies. In some cases they have been paying these amounts for 1 year or MORE. Inevitably the debt settlement company is unable to obtain settlements on even a single account. The reason why is that most people who try debt settlement are very deep in debt relative to their income. It will take them many months if not years of payments just to build up 50% of the balance on their smallest credit card. By that time, the balance on every card has already doubled due to interest and fees, and one of if not several of the credit card accounts have SUED YOU. That lawsuit results in you being garnished, your credit being further ruined, and then due to the garnishment you are unable to afford your basic necessities, much less payments towards supposed debt settlements!

Here are just a few of the biggest lies debt settlement companies tell you:

  1. The money you give them is going towards an account to settle your debts.

LIE! In every case I've seen the debt settlement contract allows the debt settlement company to pay its fees first. They either don't tell you their fees, they lie about them, or they bury them in fine print. The fees charged by these companies are truly criminal. One company charged my client $3600 essentially just for taking money and putting it into an account, and having a barely trained secretary send out a few letters and make a few phone calls. It is not difficult at all to get creditors to stop contacting you. They are required to cease and desist if told to do so under federal law. However this does not mean they are required to work with you, and this does not mean they can refrain from suing your for all you're worth. Often debt settlement just forces creditors to take things to the next level and sue you because the debt settlement company is certainly not giving them any payments, and many companies force all calls to be referred to them.

  1. They can settle your debts for XYZ percentage of what's owed.

TOTAL LIE! Credit card companies and medical service providers almost always want MORE THAN 50% of the debt in order to settle, and that's only if you can come up with a LUMP SUM payment in less than 2 months. Most people cannot come up with that amount of money to settle even one account, much less the 5 or 6 accounts or more that most people have!

  1. No one can sue you while the debt settlement process is going on.

     

    TOTAL LIE! I recently received a call from an irate man who was surprised to learn that one of the credit card companies he was trying to settle with had sued him. He believed that the debt settlement company was making monthly payments towards his debt. He believed that the credit company was not going to sue him because the debt settlement company said so. That was a total lie. No debt settlement company can force a credit card company to stop or postpone a lawsuit. The truth is that bankruptcy, on the other hand, actually can stop a lawsuit as well as force a creditor to essentially cancel the debt and give up collecting forever. Once your bankruptcy case is filed, be it Chapter 7 or Chapter 13, there is instantaneously a federal court order which goes into effect. This federal court order stops all lawsuits, garnishments, phone calls, letters and other collection activity of any kind. Creditors almost never violate this court order, they instantaneously go away 99% of the time! That's because bankruptcy is real, bankruptcy is powerful, and bankruptcy is backed up by federal court orders. I actually like it when, once in a blue moon, creditors violate the bankruptcy court judge's order. Usually they violate by continuing to call or send letters. Sometimes they do one more week of wage garnishment even though they are 100% aware of the bankruptcy case. When this happens I like it because I haul them into court and ask the judge to assess sanctions against them. My clients actually get money, attorneys fees, and punitive damages from these creditors who are stupid enough to violate the bankruptcy judge's orders. Quite simply, bankruptcy works and debt settlement doesn't. As long as you are honest with the bankruptcy trustee and your attorney, and you don't try to hide anything, you are GUARANTEED to get your debts wiped away with bankruptcy. I have NEVER had a client fail to receive their bankruptcy discharge eliminating their debts. That's because all of my clients are good people who understand that all they need to do is tell the truth, allow the bankruptcy to eliminate their debts, and then they can move on with a fresh start to even bigger and better things in their life.

  2. They can settle your debts for XYZ percentage of what's owed.

    TOTAL LIE! Credit card companies and medical service providers almost always want MORE THAN 50% of the debt in order to settle, and that's only if you can come up with a LUMP SUM payment in less than 2 months. Most people cannot come up with that amount of money to settle even one account, much less the 5 or 6 accounts or more that most people have!

  3. No one can sue you while the debt settlement process is going on.

    TOTAL LIE! I recently received a call from an irate man who was surprised to learn that one of the credit card companies he was trying to settle with had sued him. He believed that the debt settlement company was making monthly payments towards his debt. He believed that the credit company was not going to sue him because the debt settlement company said so. That was a total lie. No debt settlement company can force a credit card company to stop or postpone a lawsuit. The truth is that bankruptcy, on the other hand, actually can stop a lawsuit as well as force a creditor to essentially cancel the debt and give up collecting forever. Once your bankruptcy case is filed, be it Chapter 7 or Chapter 13, there is instantaneously a federal court order which goes into effect. This federal court order stops all lawsuits, garnishments, phone calls, letters and other collection activity of any kind. Creditors almost never violate this court order, they instantaneously go away 99% of the time! That's because bankruptcy is real, bankruptcy is powerful, and bankruptcy is backed up by federal court orders.

    I actually like it when, once in a blue moon, creditors violate the bankruptcy court judge's order. Usually they violate by continuing to call or send letters. Sometimes they do one more week of wage garnishment even though they are 100% aware of the bankruptcy case. When this happens I like it because I haul them into court and ask the judge to assess sanctions against them. My clients actually get money, attorneys fees, and punitive damages from these creditors who are stupid enough to violate the bankruptcy judge's orders. Quite simply, bankruptcy works and debt settlement doesn't. As long as you are honest with the bankruptcy trustee and your attorney, and you don't try to hide anything, you are GUARANTEED to get your debts wiped away with bankruptcy. I have NEVER had a client fail to receive their bankruptcy discharge eliminating their debts. That's because all of my clients are good people who understand that all they need to do is tell the truth, allow the bankruptcy to eliminate their debts, and then they can move on with a fresh start to even bigger and better things in their life.