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I think it’s important for a debt consolidation lawyer to define what different debt relief options are being offered via phone solicitation and via the Internet, and that’s exactly what I’ve been try to do in recent Bankruptcy in Indiana articles.

For just about all of the twenty-plus years that I, my colleagues in the Anderson, Bloomington, and Indianapolis Zuckerberg bankruptcy law offices, and the Columbus bankruptcy lawyers who work in my offices there have been in practice, we have been focusing on providing debt relief.

We do this in the course of providing help with small business bankruptcy in Indiana, as well as in helping with individual bankruptcy in Indiana.

What’s happened during the recent recession is that the term “debt relief” has come to mean many different things to many different people.  As a bankruptcy lawyer in Indianapolis, it hurts me to know that many (although certainly not all) of the debt relief programs are, as msnbc.com refers to them “nothing more than scams run by con artists who can’t deliver on their promises.”

Here are some of the main types of debt relief being offered to consumers:

Debt settlement companies promise to negotiate reductions in the outstanding balance of loans of as much as 40-60%. The company asks the consumer to deposit money in a trust account every month.  When enough money has accumulated in the account to offer a lump sum settlement to the creditor, then and only then does the negotiation for a settlement take place.  Meanwhile, two things are happening: The agency is taking fees out of each monthly deposit, and late fees and penalties are piling up on the original debts. By way of providing bankruptcy information in Indiana, I often stress that, whether or not filing personal bankruptcy in Indiana is your best option, the first place to check out debt relief is with a consumer bankruptcy specialist.
 

• Debt consolidation companies offer to consolidate all your bills into one monthly payment.  The concept is to get individual creditors to agree to deeply cut their interest rates and to eliminate, or at least reduce, late fees and over-limit charges. In theory, this makes the one monthly payment much easier to manage by the consumer. What has caused all the regulatory crackdowns on debt consolidation companies is that they charge nonrefundable fees up front and then either never negotiate with the creditors at all, or are unsuccessful in getting creditors to make any concessions. (Chapter 13 bankruptcy law in Indiana is actually the only debt consolidation plan that forces creditors to stop collection efforts while you work through your plan! )
   
• Debt consolidation loans offer one new loan at a lower interest rate into which all the old loans are “rolled”.  Again, rarely have creditors agreed to the arrangement, yet fees are charged based on a “promise” to arrange such a loan. One of the services offered at the Zuckerberg bankruptcy law offices is negotiating with creditors, but no one can promise that any creditor will agree to any concession!
   
• Credit repair companies offer to restore your good credit by negotiating with creditors to reduce fees and penalties.  The Federal Trade Commission has cracked down on many credit repair companies who promised services they either could not or did not provide.  Remember that no one has the right to take true statements off anyone’s credit report!

As a long-time debt consolidation lawyer, I always encourage clients to check out all the options.  However, and this is something I’ve said many times, and  which I’m sure I’ll say it many times in the future – while you keep looking for help in all the wrong places, valuable time and valuable options are being lost.  It’s crucial to obtain experienced LEGAL advice at the first signs of financial trouble!

 

Similar Posts:

• Good Bankruptcy Attorneys in Indiana Continue to Be Concerned About Get-Out-of-Debt Schemes
• Debt Relief: What are the Alternatives to Bankruptcy?
• Bankruptcy in Indiana Answers Readers’ Questions: How Much Does Bankruptcy Cost?
• Indiana Lawyer For Bankruptcy: What Does the Means Test Mean For Vehicles?
• Bankruptcy in Indiana: Some Debt Just Can’t Be Discharged