Debt consolidation and debt negotiation….why not?

Most people would like to pay back their debts. Debt consolidation specialists and negotiators rely on this natural and common sentiment to find customers for their services. So why not just pay it back?

When folks are faced with the inability to make payments on their debts they start looking for ways out. Debt consolidation often seems like a good idea.

Why not consolidate debt into one lower monthly payment? First, many debt consolidators will not do the detailed work necessary to determine whether you can actually afford the lower payment. When presented with the opportunity to pay $600 per month rather than $850 per month – most people think that is a better deal. However, they don’t necessarily look at their income to determine if the new lower payment is really affordable. The result is often a bankruptcy filing 3-6 months later, after valuable resources and time have been spent trying to pay the consolidated debt without success. Even worse, the consolidation loan may be in the form of a second mortgage or home equity loan. With this option, the debt is now attached to your home and failure to pay may result in loss of your home! This may be an irreversible mistake.

Bankruptcy can be a scary option to consider, but many times less scary than the conditions that may accompany a home equity loan, or a lesser monthly payment through consolidation that is still unaffordable. Bankruptcy exemption laws protect the equity in your home and allow you to keep your home. Call for a free consultation and find out how to rid yourself of debt and keep the equity in your home!

Pennies on the Dollar!

Debt settlement is also a seemingly good way to get out of debt. Many people have heard or believe the claim of settlements for pennies on the dollar! However, once the client receives the contract and reviews the contract with the debt settlement attorney they often find that nothing is guaranteed except that the attorney will get paid. Many of my clients started with a debt settlement attorney or firm. They were making payments toward debt settlements but then they got sued in court by other creditors and wage garnishment followed. Many of these folks believed that the debt settlement firm was going to protect them from lawsuits or that the debt settlement attorney would appear in court on their behalf – only to find that they were on their own! Debt settlements vary widely and there is nothing to stop the creditors from refusing to settle and suing the client in court. Some of the debt settlement attorneys are in far-away places like Florida, New York or California. Folks sign up for this on-line and never meet the attorney or have any idea where they are sending their money. This can be a big problem when they see that debt settlement is costing them a lot without much being accomplished. When they ask for their money back they are sometimes referred to small print in the multi-page contract they signed and don’t always get their money back or in a timely fashion.

Always be careful what you sign!

If possible try to deal with someone local so that if a problem comes up you can meet with an actual person and have your questions answered! If you qualify for chapter 7 bankruptcy your unsecured creditors are discharged and you only pay for the attorney fee and filing fee.

Piletich and Skokan always offers a free consultation! Come in and let us help you.