Boston Bankruptcy Clients Question Debt Agencies
Many of our personal bankruptcy clients have tried to consolidate their debt by hiring debt management companies. This generally does not work for a variety of reasons, one major reason being that those companies are often owned by the credit card companies! Whose interests are they going to serve? Not yours!
The usual strategy of those companies is to get you to sign an agreement. Then they collect money from you monthly. They send a letter to all your creditors. They try to negotiate with the creditors to obtain two things: first, they negotiate the fee that they will receive from the money you pay, and second, they ask for you to be able to make reduced payments. There is no guarantee that this will work for most creditors, and it rarely works for all creditors. Even if it does work for some creditors, it doesn’t do anything you could not have done yourself; at anytime, you can try to negotiate a reduced payment by speaking with the creditor yourself. By hiring another company to consolidate your debt, now you are also paying a percentage to them! The companies sometimes collect money from you monthly without even paying the creditors (we hear this one all the time from clients); then, when you “default” they will try to negotiate the debt. This works sometimes, but not other times. Your credit suffers, and you have no control over which strategy they are undertaking and how they are doing it.
Consider bankruptcy instead. Chapter Seven Personal Bankruptcy offers a complete discharge of all consumer debt by the United States Courts, unlike debt discharged using other methods; debts (or parts of debts) that are discharged using a method OTHER than Chapter Seven Personal Bankruptcy can result in the creditor issuing a 1099 form, meaning that they count the discharged debt as income to you! You will then have to pay taxes on that “income.” Chapter Seven Bankruptcy, on the other hand, results in a full discharge by the Federal Court.
If you’re worried about bankruptcy being on your credit report, keep in mind that credit reports also include participation in debt collection programs. Therefore, if you have considerable debt and considerable assets, contact us to help you negotiate your debt. If you have considerable debt and no realistic way to pay it, contact us for a consultation for a personal bankruptcy.