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Be Wary of Debt Relief Companies

Debt Relief

If you’re deep in debt, you may feel desperate for a way out. There are many companies eager to take advantage of you while you’re in this state of fear about your future. Frequently, these companies offer solutions to your debt problems that seem too good to be true—and usually, they are. Certain debt relief or debt settlement companies fall into this category. Learn more about when to be wary of debt relief companies, and speak with a lawyer who focuses on bankruptcy and debt settlement for assistance.

What is debt relief?

Debt settlement can be a valid solution for certain people who have a crushing amount of credit card or medical debt. Debt settlement services will contact your creditors and make an offer to settle for a lump sum on your behalf. Clients will then make payments toward that lump sum through the debt settlement company, rather than making regular payments to their creditors directly. Debt relief companies typically tell their clients to stop making payments directly to creditors altogether. Paying off the lump settlement tends to take at least three years.

Debt relief companies don’t mention risks

Often, the trouble comes from what debt relief companies don’t explain about the process of settling your debts. Debt relief companies don’t always explain the potential damage that may occur to their customers’ credit scores. Since the client is not making payments to the creditor directly during this process, the client may be saddled with substantial late payment fees, continue to receive harassing telephone calls, and may even be sued for the debt. Customers of debt relief companies often find themselves unable to keep making regular payments toward the lump settlement and end up failing out of the settlement arrangement in even more debt than when they began.

Hiring a lawyer to assist you with your consumer debt may be a safer choice

Debt relief companies are not often staffed by lawyers. Hiring your own lawyer to settle your debts offers greater protection to you as a client. Your lawyer will have a duty to act in your best interests, and if they fail to do so, you have the option to file a claim against them or complain to the State Bar. Debt relief companies, on the other hand, often work with clients remotely. They may be difficult or impossible to track down should they fail to deliver on their promises to you. By working with your own attorney to explore debt settlement, you’ll also be prepared to file for bankruptcy, if debt settlement efforts fail.   If you chose to repay your debts through a bankruptcy, a Chapter 13 bankruptcy offers all of the same benefits as a debt settlement company except that the Chapter 13 offers protections for you from creditors.  Debt settlement companies offer no protection for you from creditors.

If you are an Alabama resident in Montgomery or surrounding areas who is facing growing debts from credit cards or medical costs, speak with an attorney about your options for getting a fresh start by contacting the compassionate and skilled Montgomery bankruptcy attorneys at the Dansby Law Firm for a consultation, at 334-834-7001.

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