The New York Times recently posted an article referencing a report from the Center for Responsible Lending, a nonprofit research group, that found consumers that worked with for-profit debt settlement companies had their debts grow by about 20% on average before a settlement was reached, with no guarantees that a settlement would be reached!
We have discussed in the past the potential pitfalls and scams that some debt settlement companies engage in, promising to reduce debt and interest rates by negotiating with creditors on behalf of clients.
The truth is, debt settlement companies have very little leverage over creditors. During negotiations, debts will continue to grow and accrue interest, 20% on average, and if negotiations fall through or they decide not to make any changes, its quite possible someone could find himself or herself out the money they spent on debt settlement services and higher debt bills than when they started the process!
Bankruptcy is completely different. Bankruptcy gives you back control over your financial situation. Bankruptcy has the power and force of federal law in the Bankruptcy Code. No debt settlement company has that kind of leverage. In most cases, a Chapter 7 bankruptcy will result in all of your medical bill and credit card debts being wiped out completely. Reduced to zero. No negotiating necessary.
We encourage anyone facing difficult financial situations to call us for a free phone consultation. We’ll discuss your specific financial situation, what options you have, and if bankruptcy is right for you. Our Kansas City bankruptcy attorneys have helped thousands of individuals, families and businesses work toward a brighter financial future.