Debt Settlement Agencies and You

Radio and TV ads are big drivers of the debt settlement industry.  The ads I see and hear lead one to believe that you will be protected from the IRS and credit card collectors with a phone call to a debt settlement agency; that debt settlement is nothing more than presenting a three year plan of payment, that the creditor will be reasonable and happy to accept some money over time rather than no money at all or instead of chasing you over time.  While the logic makes sense, reality is something different.

Consider, when dealing with the IRS, it has rules and regulations concerning the process known as “An Offer in Compromise”.  An O/C is more than just offering the IRS to pay a portion of your tax obligation because you have very little money right now.  An Offer in Compromise looks at your future ability to earn/make/come into money.  The IRS is going to evaluate your age and the prospect of future financial performance.  If it looks like you will be able to bounce back financially in the coming years, they won’t be so willing to take a small percentage and close out your file, no matter what the debt settlement agency says.

With credit card companies, they will press for a greater percentage of collection amount if the debt has gone into default relatively recently.  Debt settlement agencies may tell you to stop paying and once done, they can negotiate a better deal for you.  When you have defaulted and are waiting the several months, you will receive dunning calls and letters; you may end up being sued.  Your credit score certainly tanks.  At a minimum, after all of that, you will still be paying 40-60% of the debt.

Debt buyers such as Portfolio Recovery Services, Unifund, Palisades Collection have purchased debt from BOA, Citi, Discover, WFNB and others.  Although each has paid pennies on the dollar, that does not necessarily translate into you paying pennies on the dollar to settle your debt.  They bought a contract and your obligation on that contract is for the full amount; the debt buyers will pursue you to gain maximum benefit.

And in the end, when you are contacting these debt settlement agencies for help what is in your mind?  The answer: Pay as best you can.  Save your credit score, be a good citizen while struggling under the mountain of debt and the many collectors who are chasing you.  At the outset you are thinking, never, never file for bankruptcy; and bankruptcy may not be the answer.

My experience after meeting with people who have been through the mill, through all of the above, is that my clients wish they had met me first rather than after suffering long and hard.  Our office has many, many solutions to helping you rid yourself of the debt and stress which has engulfed you.  In the end, you save money by using a consumer lawyer.  People spend $5,000.00, $10,000.00 and even $20,000.00 to settle their debt over several years.  We have solutions that are far more efficient, cheaper, rehabilitate your credit faster, are reliable and eliminate the stress in a far shorter period of time.
Each person’s situation is unique.  We evaluate and implement a tailored solution for each client.

Knowing that people go into debt settlement with great hope and positive intentions, I always regret seeing and hearing the IRS and debt settlement TV and radio ads.  If you are in a debt settlement program now or are considering one, you owe it to yourself to consult with me and understand alternative courses of action available to you.  You owe it to yourself to make an informed choice.  Call for an appointment today, 215-822-2728.  We are courteous and confidential.