26 Jan Bankruptcy Foes: Debt Relief Company Settles With NC Attorney General
Bankruptcy is not something that anyone wants to do, but it is often the best course of action for a consumer in debt. Filing for bankruptcyis often seen as a failure, sign of weakness or immoral. Understandably, people who file don’t go around telling everyone how much better life is for them now that they filed, but people sure are quick to mention how terrible it is to file.
In an effort to avoid filing bankruptcy, people will often try many different ways to avoid filingincluding working with a credit counseling company in a debt management program or a settlement program.
The NC Attorney General Roy Cooperannouncedin a press release that a settlement has been reached against “The Consumer Law Group of Boca Raton, Florida“, a company described in the press release as a “bogus Florida law firm that falsely claimed it would reduce consumers’ debts…”
â€œDebt relief scams take advantage of struggling consumers, adding to their burden instead of helping them get out of debt,â€ Cooper said.â€œIâ€™m pleased that weâ€™ve been able to win money back for these consumers, money that can hopefully help them pay off bills and get on better financial footing.â€
The North Carolina Attorney General’s Office sued this particular debt settlement company after consumers complained about all sorts of problems they had with the company.
The settlement by the Attorney General’s Office is a nice victory for consumers, however it took a a lot of work and a lawsuit to shut this company down. Sadly, many more of these companies remain in business and more will pop up, playing on thedesire of most people to try to honorably settle their debts.
The Attorney General took on one of the really bad companies and won, but the problem is that many of these companies are not acting in the debtor’s best interest and they are still out there.
(To see a news video on this story, go here)
Even if reputable, since none of them can offer legal advice since they aren’t lawyers, when you go to one of these companies, many justexplain the program they offerand never give full information on alternatives that may be better for the individual.
Andbankruptcy might be the better option – which is not something you want to discover after you have spent hundreds or thousands of dollars trying the alternatives.
Chapter 13is a good way to pay what you can towards your debts, but protect you and your assets and keep your creditors away. Some people pay all their debts off in Chapter 13 payment plans, but others pay a reduced amount.
Chapter 7helps you get a fresh start fairly quickly, if you aren’t in a position to make payments. You get to keep some of your property (for many people, they keep everything) and can allow you to get your budget balanced and provide for your family.
I encourage people with debt problems to first see an experienced bankruptcy lawyerwho can discuss all your options, since I feel that an attorneycan explainhow bankruptcy works, explain themyths about filing for bankruptcy, but also explore any non-bankruptcy options.
I often encourage clients who might have some discretionary funds available to pay towards their debts to to see a good credit counselor before making up their mind after seeing me. That way they know that they have explored all their options andexamine other viewpoints, but that their decision is based upon facts and sound advice.
Debt settlement or debt management programs might make sense for people who earn more money than they need to cover their regular and ongoing expenses, or who have a lump sum to pay towards debts that might not pay them in full.
However in considering these options, you would need to be sure that your budget is sound, and that it not only covers your monthly expenses but also includes things that don’t come up every month (like car maintenance, house repairs, medical bills, clothing, etc).
You don’t find yourself in financial trouble a few months or years down the road, after you use all your ‘extra’ funds to pay towards the debt program. Especially when you should have seen those predictable emergencies coming. (Also see Liz Pulliam Weston’sArticle: Why You Need $500 In The Bank )
Areputablecredit counselor will not charge fees up front in North Carolina.
- Charging fees up front for debt reduction, negotiation or debt settlement is not allowed in North Carolina.
The Consumer Law Group tried to get around this law by falsely claiming to be a law firm providing legal services.
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