If you are overwhelmed by bills but are not yet ready to declare bankruptcy, debt settlement can be a viable legal solution for your financial burdens. While some private debt settlement companies may promise to wipe out your debt for just a small fee, such guarantees are unfortunately simply too good to be true. Here are just a few of the pitfalls—and fees—associated with debt settlement firms.
Attorneys often recommend debt settlement for individuals who are heading toward bankruptcy but who do not qualify for Chapter 7 liquidation. Because each case is specific, an attorney analyzes each client’s finances before recommending debt settlement as an alternative to Chapter 13. But the employees of private debt settlement companies work on commission, which means they make money off of each client whom they guide toward debt settlement, regardless of whether it is the best option.
Debt settlement companies may promise a low fee, but the contracts are often intentionally confusing and even misleading. Some companies will charge you a percentage of the total debt, while others charge a percentage of the debt savings plus an initial sign-up fee and monthly service charges. Even if you manage to navigate the confusing language, debt settlement services can be so expensive that it takes clients years to pay just the fees—before they even begin to pay off their original debt.
Once your creditors discover that you are working with a debt settlement agency, they may actually escalate your account by either sending it into collection or suing you. Unfortunately, when a creditor files a lawsuit, your debt settlement company will drop you, because only an attorney is qualified to represent you in court.
At Burr Law Office, we are committed to helping all our clients regain their financial footing. To find out how you can affordably discharge your debts through bankruptcy or satisfy your creditors through debt settlement, call our office today at (877) 891-1638 to set up a free consultation with attorney Michael Burr.