As a bankruptcy lawyer near Asheville NC, it hurts when I speak with people during an initial consultation who have been paying money they desperately need for their families to unscrupulous debt settlement “law firms.” The sales pitch is aimed at people who want to avoid bankruptcy at all costs, and these “law firms” or “companies” (usually from California, but really from all over the country) promise to save up money in a trust account to offer settlements to creditors.
From the magazine Smart Money, here is an article which explains debt settlement costs too much and does not produce results. Here is a list of problems:
1. Debt settlement salesman are paid on commission and trained to try and get everyone to sign up for it.
2. You could, and probably will, get sued.
3. Your credit will suffer.
4. You will owe the IRS taxes on any forgiven debt.
5. The Department of Justice and FBI are investigating many of these groups, and shutting them down, for being corrupt.
The latest one to advertise in our area has a website which appears to be straight from a non-profit arm of the United States Government, with a .ORG extension in their web address. They promise no up front fees (because they used to trick people into up front fees before the FBI shut that practice down for being a worthless scam). They charge you thousands of dollars anyway, just not up front.
These type of deals have very, very low success rates, cost much more than a bankruptcy case, and damage credit just like a bankruptcy would. Are you sending hundreds of dollars a month to debt settlement firm? If so, contact me for a free consultation where we can talk about your other, better options.
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