An alternative to bankruptcy tops every debtor’s wish list. “Don’t file bankruptcy”, warn debt settlement companies on the radio, feeding that desire. Instead, they want you to pay your money to them. They say they will help you save up a big pot of money and then settle your debts for pennies on the dollar without bankruptcy. The problem with this is that it almost never works. Why?
- While you are giving them your money, you go into default with the credit card companies
- When you go into default, your interest rate goes to the moon
- Your late charges and fees also go up
- You start getting sued
- Your wages start getting garnished
- If you actually “save” enough money to make a settlement offer, you are making it on a much higher amount than you owed before
- If you settle for a discount, the discount you settled for is almost a much as you owed in the first place
- The “debt settlement” company wants a big fee for doing what it did for you.
I listen to these ads on the radio. Do you? The voice is always soft and soothing. They have “secret information” which they are going to share with you – you’re special, right? – just for calling them. They say “Don’t file bankruptcy” and “let us save you thousands.”
I say to you, Debt Settlement Companies are scams and will almost always leave you worse off than they found you.
About David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney
David Leibowitz holds a B. A. in Economics from Northwestern University and received his J.D., cum laude, from Loyola University of Chicago School of Law where he also served as Note Editor of the law review. Admitted to the Illinois and Wisconsin bars, he is the managing member of Lakelaw, an interstate law firm with offices in Chicago, Skokie and Waukegan in Illinois and Kenosha, Wisconsin. He is nationally recognized for his work in identifying and pursuing mortgage related claims in the context of bankruptcy. David is a member of both the Illinois and Wisconsin bars and has practiced in bankruptcy courts throughout the country. He is a member of the American Bankruptcy Institute where he is the Co-Chair of the Commercial Fraud Committee. He is ta frequent contributor to the ABI Journal and speaker at ABI events. He is an author and editor in chief of the American Bankruptcy Institute Fraud Manual published in 2010. He is also a member and Director of the National Association of Bankruptcy Trustees, a member and frequent speaker for the National Association of Consumer Bankruptcy Attorneys and numerous state and local bar associations. He is Board Certified by the American Board of Certification in both Consumer Bankruptcy Law and Business Bankruptcy Law. David is also the publisher of Lakeblawg, www.lakelaw.com/lakeblawg, a blog dedicated to consumer and small business bankruptcy and mortgage foreclosure defense.
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