Question:
I have recently heard of agency out there that will reduce your debt by 70%, just by them somehow talking to them [your creditors]? Do you know anything about this method? Is it legit? I have even heard it on my local radio station and they talk like it is totally legit. - Kevin
Answer:
It really depends on what they mean by "reduce your debt by 70%" and most likely it is "up to 70%" and not all customers can get a 70% debt reduction.
What could this mean?
Several things. One could be bankruptcy. Several "companies" and "debt counselors" are just fronts for bankruptcy attorneys. A Chapter 13 bankruptcy can significantly reduce your debt. All your creditors get notified and have to respond in order to maintain their claim on you. If they don't respond, they lose out and you don't have to repay the debt.
Oakland Bankruptcy Attorney, South Carolina Bankruptcy Lawyer, Bankruptcy Lawyers San Diego,
A judge will then look at your income and decide what you can afford to pay toward your debts each month. S/he then decides how long you will make payments and what portion of each payment goes to which remaining creditors.
But, of course, a bankruptcy on your credit report completely hoses your credit. You can still borrow money, but you will be paying 25% rates and it will cost much more in the long run. Also your bankruptcy may not be approved and you could end up owing the attorney money for his/her time.
OR it could be a form of debt negotiation. The company calls up your creditors and tells them that you are considering bankruptcy. If they want to help you avoid bankruptcy (and thus preserve your debt to them) they must either lower the amount you owe, reduce the interest rate, or halt the interest charges.
Sometimes this works, sometimes not. But when a creditor writes off part of your debt, they usually report it to the credit agencies and it appears on your credit report and also adversely affects your credit scores. They may also flag your file as a possible bad debt and later deny you additional credit or services.
OR it could be that they are trying to help you lower your monthly payments, usually through a debt consolidation loan, home equity loan or a complete refinancing of your home. If this is the case and you don't own a home, they will quickly "refer you to someone who can help" (yeah, right!) because they are just looking to make a quick $5000 on loan fees. These companies are just fronts for mortgage brokers.
OR other companies want you to make a single payment to them and offer to pay your bills for you. They use teasers like reducing your debt 70% to get you in their door. While it may seem nice to only have to make one payment instead of 10, there is usually a hefty start-up fee and you pay the company monthly fees of up to $50 or more for this service. (10 stamps are much cheaper.)
The problem with this arrangement is that you have not done anything to change the habits and actions that got you into trouble to begin with. And you have no direct feedback as to how the debts are being paid off. And if the company should have financial troubles and miss some of your payments, your credit report could get hammered (this happened in Utah recently).
These companies realize that you probably will continue to get further into debt, but by doing this you will continue to be a good customer for them. If they make money off of you, they have a motive to keep making money from you. So do they really want to see you get completely debt free or just remain a steady customer?
Watch out for companies that want a large up front fee (more than $200) or will charge monthly fees to manage your bills. Watch out for companies that claim they can clear up your credit report; some try illegal tactics that will get you (not them) into trouble. Remember you are considering employing them to negotiate with your creditors on your behalf; be sure you know exactly what they are going to do and say. If they don't disclose their methods, watch out.
Also remember, just like they say, "Don't believe everything you read," don't believe everything you hear, especially in advertisements. Radio and TV stations generally do not take much responsibility for what their advertisers say; that is up to the FCC and FTC. If you purchase an ad you can pretty much say what you want so long as it doesn't get the station in trouble. Check out some 2 a.m. infomercials; they are a hoot!
Bankruptcy Attorney In Phoenix
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Bankruptcy Attorney In Phoenix
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment