Couple going over finances with a consultant.

Why You Should be Cautious of Debt Negotiation

Maybe you have seen the billboards across the highway or received phone calls promising to “get rid of your debt now!” This is the classic case of something that sounds too good to be true, and oftentimes is. Unfortunately, many of these claims are misleading and attempt to take advantage of desperate people trying to find financial relief. These companies take your money and don’t settle your debt.

The broadcasted benefits are that your debt amounts will be lowered, you can avoid bankruptcy, and it gets the creditors and debt collectors off of your back. As lovely as that sounds, the risks involved outweigh the advertised benefits.

Essential Points to be Aware Of

Debt Consolidation companies claim they have exceptional legal secrets and unique relationships with creditors when this is simply not the case.

Furthermore, your creditors have every right to deny your negotiation desires. There is no guarantee that the consolidation company will be able to reach an agreement for the debts you owe, and some companies may refuse to negotiate at all.

Hidden Fees and Other Implications

Debt consolidation companies make their money by charging astronomical fees. These can range from $500-$3,000, per debt or even as monthly recurring charges and none of that money is going towards settling your debt. Instead, it is going directly into the company’s pocketbook.

Credit Scores

Entering into a debt consolidation plan can sometimes have the same effect on your credit as actually filing for bankruptcy – yet you are paying the debt back! Your affiliation with the consolidation company could be reported to the leading credit bureaus and the lasting effects of this can include inhibiting your ability to get loan terms, credit availability, employment opportunities, and more. This is all because you want to try to work something out with your creditors in good faith but you end up in a worse financial position, monetarily and credit score wise.

Judgments and Liens

I routinely receive calls from clients who have unknowingly gotten mixed up with these scam companies – they have paid huge fees and with no relief. Clients come to me with judgments and liens on their home that they never knew about until it was too late. These companies are not attorneys and therefore cant represent you in Court. Additionally, they have all correspondence from your creditors sent to their office so you are kept in the dark about the status of your accounts. Some clients are not made aware of what’s going on until they receive wage garnishments or their bank account is frozen.

What You Should Do

If you find yourself in the precarious situation of considering debt resolution of some type, you have a number of alternatives to consider. The best course of action to take if your debt is overtaking your life is to work with a reputable lawyer at who can present all your debt relief options to you. Bankruptcy is not always the answer or right for everyone. It is crucial to work with a legal team that knows the law backward and forwards and understands your rights as a borrower.

Contact to Get the Help You Need

Our team is committed to providing you with sound legal advice and a personalized approach to your case. Over the past decade plus, our team has helped many clients apply a tailored approach to personal debts, and we want to do the same for you. We can help evaluate your situation, work with creditors, and help you fight for justice if they have committed creditor harassment.

To learn more about our debt services in Southbury, call to schedule your free consultation.