Learn the Shocking Truth About Credit Counseling and Debt Settlement Services

If you watch television, you’ve seen all the ads for credit counseling and debt settlement services. If those television ads are to be believed, debt settlement and consumer counseling are hands down better than bankruptcy. And believe me, those T.V. commercials are very persuasive. If I didn’t know better, I’d believe them, too.


Following Are Five Shocking Truths About Debt Settlement and Credit Counseling Services

  1. Most debt settlement and credit counseling services are scams. They simply do not provide all that they promise. Moreover, they often charge excessive up-front fees which they refuse to refund when they don’t come through with the promised services.Bankruptcy is 100% legitimate and it is governed by federal law. Regardless of what the debt settlement companies and credit counseling companies tell you, bankruptcy is the only way to stop harassing collection efforts by your creditors and to stop lawsuits, wage garnishments, foreclosures, and repossessions.
  2. Many debt settlement companies and credit counseling services are in bed with the credit card companies and collection agencies. Many of the credit card companies and collection agencies have contractual agreements with certain debt settlement and credit counseling services. They will only work with these companies in resolving a consumer’s debt issues. If the consumer has signed on with an “unapproved” debt settlement or credit counseling company, his settlement offer or consolidation plan will be turned down flat.When a consumer signs on with an “approved” debt settlement or counseling service, the creditor may agree to lower the interest rate and to accept installment payments for a specified number of months. The purpose of these arrangements is to keep consumers from filing bankruptcy for as long as possible. Most of the creditors and collection agencies who have these types of agreements service “dischargeable” unsecured debts and they know once a consumer files bankruptcy, there unlikely to receive a dime.When you file bankruptcy, your creditors don’t have a say. They are forced to take their place in line with other similarly situated creditors. And if they don’t get paid anything, there’s absolutely nothing they can do about it.
  3. Credit counseling and debt settlement can actually harm your credit. If you sign on with a credit counselor and your payments are not handled properly, your creditors can begin reporting derogatory credit again. Moreover, many debt settlement agreements allow creditors to continue making derogatory entries on your credit report until the debt is paid in full.When you file bankruptcy, your creditors are prohibited by the automatic stay from reporting anything beyond the fact that the debt was discharged in bankruptcy. They cannot report any aging delinquencies on your debts. This fact alone will stop any further damage to your credit rating. Additionally, when you receive a discharge (or as you pay off or pay down debts in a Chapter 13 case), your debt to income ratio will improve, which will have a positive impact on your credit score.
  4. Credit counseling and debt settlement do not eliminate debt. Credit counseling and debt settlement may eliminate or reduce interest, but they do not completely wipe out principal. Regardless of the repayment or debt settlement plan you negotiate, you’re going to pay at least 40-60% of what you owe.If you file a Chapter 7 bankruptcy, the majority of your unsecured debts – credit card bills, medical bills, and personal loans – will be wiped out completely. If you file a Chapter 13 case, you may have to pay a portion of your unsecured debts, however it could be as little as 1%. But how much you will have to pay depends on the composition of your Chapter 13 plan. Whatever remains unpaid on your unsecured debts at the conclusion of your Chapter 13 plan will be discharged.
  5. Many people who choose debt settlement or credit counseling end up filing bankruptcy anyway. Because most credit counseling plans and debt settlement plans deal only with credit card debt and are structured to allow for the accrual of interest during the repayment period, many consumers end up with payments they simply cannot afford. If a payment is missed, the repayment or settlement plan is automatically void and the creditor may have the right to add any interest payments that it had agreed to waive to the principal balance of the debt. Moreover, the collection calls will resume immediately. So the consumer is back at square on and will eventually file bankruptcy anyway.

Skip the Gimmicks and Go With What Works!

So, why go through the charade of debt counseling or credit counseling? The relief these programs provide doesn’t even come close to the relief afforded by filing bankruptcy. Filing bankruptcy offers so many advantages that credit counseling and debt settlement don’t. So, it’s really a no brainer.

And don’t believe all the lies and myths about bankruptcy. Keeping those untruths about bankruptcy circulating is the best way for your creditors to keep you on the hook for every penny you owe them and to keep you in a perpetual state of indebtedness.

Get Legal Help

When you hire a reputable bankruptcy attorney, like us at Bankruptcy Professionals, you don’t have to be worried that you are being scammed or that your interests will not be protected. Our bankruptcy attorneys are on your side and have over 15 years bankruptcy experience; they are not in bed with the credit card companies and banks. Our bankruptcy attorney will fight for your fresh start as though they were fighting for themselves.

We at, Bankruptcy Professionals, are well versed in all aspects of bankruptcy law and will bring their knowledge and expertise to bear in your case. So, don’t waste your time or you money on credit counseling or debt settlement. Give us a call today so that we can help you get the fresh start you deserve. 888-970-1090

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