Bankruptcy Phone Consultations are Free and Without Obligation.
FREQUENTLY ASKED CONSUMER BANKRUPTCY PROTECTION QUESTIONS:
Here are a few common questions many have asked us, including the answers from our experienced bankruptcy attorney. If you have any common questions, please call us (407) 556-7078 today!
1. Will I lose anything if I file for personal bankruptcy? Generally, you may file a bankruptcy and retain all of your personal belongings, including your house, your car and all household goods. We will make sure that all of your personal belongings are protected. If you owe more on your car than the car is worth, the bankruptcy court will not sell your car, because after the sale there wouldn't be enough money left over to make a distribution to your creditors. The same goes for your home and personal property. Even if your property is worth more than what is owed on it, usually we can use the state bankruptcy exemptions to protect these items.
You may be more at risk of losing property if you don't file bankruptcy, as creditors can sue you and attach your bank accounts, garnish your wages and attach and seize your property. As a result, you may miss your rent, mortgage or car payments, making it difficult to provide even your most basic necessities.
2. When do I get relief from creditor harassment? Immediately. As soon as you come into our office, we will give you a client record number and you will then refer all future creditor calls to your bankruptcy attorney. No more credit card payments and no more harassment immediately upon retaining a bankruptcy attorney.
3. Does my spouse have to file jointly with me? If all or most of the debts are in your name only, your spouse may not have to file. Creditors usually cannot pursue a non-filing spouse, unless he or she is legally a co-debtor on the debt. Additionally, the bankruptcy should not be reflected on the non-filing spouse's credit report. The law does vary, however, from state to state so make sure you ask a bankruptcy attorney about whether or not your spouse has to file.
4. Who knows about my personal bankruptcy case? The only parties that receive notice of the bankruptcy are your creditors, the bankruptcy court and the IRS. Generally, the bankruptcy will have no effect whatsoever on your taxes. Your employer will not be notified of the bankruptcy unless your employer is also a creditor. The bankruptcy is public record, so anyone who wants to find out could determine that you have filed. Generally, however, only you, your creditors and the IRS will know about the bankruptcy.
5. Will I be able to rent after I file personal bankruptcy? There were over 1 million bankruptcies filed in the United States last year alone. Common sense will tell you that these people are not all living on the street. If you are presently renting a home or apartment, usually your present landlord will renew your lease without running an updated credit report, and will have no knowledge that you even filed a bankruptcy.
If you are applying for a new lease, there could be some slight difficulties that can easily be overcome. We have found that larger leasing companies usually have stricter policies regarding leasing to applicants with blemished credit. Remember that it is the blemished credit report, not necessarily the bankruptcy that is reflecting poorly on your application. Also, with no outstanding debt, you may appear to be a better risk than other applicants who have outstanding debt and blemished credit reports. We find that a good faith gesture, such as offering an extra month security deposit, may be enough for a potential lessor to overcome her concerns about your blemished credit.
6. How do I know if I should file personal bankruptcy? *Are you calling because you are being sued??If you are being sued, and you own a home, we strongly urge you to speak with a client representative immediately about filing a bankruptcy. A bankruptcy will stop a lawsuit immediately and prevent your creditors from placing a lien on your home or garnishing your hard-earned wages.
*Is your home being foreclosed or is your car about to be repossessed? If it is, very often bankruptcy may prevent the foreclosure action or repossession from proceeding and allow you to consolidate your mortgage arrears or automobile balance and make payments on those debts over time through a payment plan designed by us with your help. If your house is being foreclosed or your car is about to be repossessed, Chapter 7 bankruptcy may not be an option. Chapter 13 bankruptcy may save your house and your car.
*Do credit cards or medical bills have you so deep in debt that it is hard for you to save for the future? If you are only paying the minimum payment on the credit card bills from month to month (generally from two to three percent of the outstanding balance), and the interest rate is only 15%, you will take about 20 years to pay off a $10,000 debt. Do you really want to be in the same financial situation in twenty years? Chapter 7 bankruptcy can provide you with a fresh start that you are entitled to under the law and get you out of debt NOW.
7. Is filing personal bankruptcy immoral or does it make me a bad person? Everyone is entitled to a fresh start. Many times, events occur in people's lives that cannot be expected. You may have had a sudden loss in income, a family medical catastrophe, a work injury, or any one of numerous other difficulties that would have been almost impossible for which to plan. Most of the people that we represent are good people who have encountered unfortunate circumstances and just want to get a fresh start. We understand that for most of our clients bankruptcy is the last resort. Many of our clients have a very difficult time determining if personal bankruptcy is the right decision for them.
You must ask yourself? Are the credit card companies concerned about your financial difficulties? Are you paying your creditors instead of saving for your children's education or your retirement? When is the last time you took a vacation? We believe that it is very important for an attorney to provide both bankruptcy and non-bankruptcy alternatives. We believe in giving you our honest opinion as to what will put you in the best possible financial condition now and into your future. The client always comes first. Please call, at (407) 556-7078 to speak with a bankruptcy attorney about the issues you should consider when deciding whether or not bankruptcy is for you.
8. How do I choose a personal bankruptcy attorney? When considering filing a personal bankruptcy, you want to be advised by someone who is familiar and experienced with all of the "ins and outs" of bankruptcy law. Especially when you own a home or car or have other assets that you are trying to protect. At The McArthur Law Firm, we spend almost all of our time on bankruptcy and getting people just like you out of debt. We will provide you with a range of fair fees right over the phone. Beware of any bankruptcy attorney who refuses to give you a fee quote over the phone. We always quote you a fee right over the phone, before wasting any of your time.
Many bankruptcy attorneys charge fees of $2,000 or more for a straight forward Chapter 7 bankruptcy. At The McArthur Law Firm we do not believe that a consumer debtor should have to pay that much money to get a fresh start. We provide high quality legal representation, often at a fraction of the cost.
9. Can I get rid of student loans or tax debts? Any bankruptcy attorney must have a sophisticated understanding of bankruptcy law to deal with student loan and tax debts. Until October 1998, student loans were discharged through Chapter 7 bankruptcy if the first payment on the loan became due more than seven years prior to the date of filing. In October 1998, President Clinton signed a new law into effect that disqualified all student loans from discharge. Legal Helpers can still help you obtain relief from your student loan debts through the use of Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, our attorneys can consolidate your student loan debt, along with any other outstanding bills, and arrange an interest free repayment plan, so that you do not have to suffer through the burden of garnishments, harassment and other collection efforts by student loan agencies. We may even be able to reduce the amount paid to the student loan agency during the course of your Chapter 13 bankruptcy so that your consolidation payment is as low as possible. If you would like to find out more about how The McArthur Law Firm can ease the burden of student loan debts through the use of Chapter 13, call at 407-556-7078 to speak directly with a bankruptcy attorney.
Tax debts are generally subject to discharge only if you file personal bankruptcy more than three years after you file a timely, truthful tax return. If your return is filed late, the taxes are generally discharged only if you file bankruptcy more than two years after filing a truthful tax return. Of course, these are general rules and you should speak with a client representative who will perform a detailed analysis of these issues.
10. Can I get credit after filing personal bankruptcy? Although bankruptcy may legally be reported to your credit report for up to 10 years, you can begin to reestablish your credit immediately. Remember that "credit" is your ability to borrow money. Lenders consider many factors while determining whether to loan you money, but most importantly, they consider your debt-to-income ratio. You are probably visiting this site because you already have more outstanding debt than you have the ability to pay. So, arguably, you do not have credit.
Filing eliminates most, if not all of your debts, therefore reducing your debt-to-income ratio, potentially improving your ability to borrow money in the future. Some financial institutions actively solicit business from people who have filed. Lenders are in business to make money by lending you money and charging you interest. Lenders know that once you have filed, you will not be able to file again for 6 years.
Many of our clients have purchased cars immediately upon receiving their discharge orders. Many lenders have programs that provide for post-bankruptcy borrows to obtain home financing within a year or two after a discharge. Many of our clients even receive solicitations for unsecured credit cards almost immediately upon receiving their discharge. The McArthur Law Firm just wants to advise you to be careful not to get back into the credit card "trap".
11. If I have used my credit cards can I still file for bankruptcy? The Bankruptcy Code provides that if a person incurrs debts on a credit card totaling more than $550.00 within 90 days prior to filing a bankruptcy case, there is a presumption that those debts are non-dischargeable and will likely have to be paid back. However, this rule only applies to purchases for “luxury goods or services.” See 11 U.S.C. § 523(a)(2)(C). What are considered “luxury goods or services?” The Code states that “luxury goods or services does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.” 11 U.S.C. § 523(a)(2)(C)(ii)(II).
12. Can my HOA sue me after I file bankruptcy? HOA lawsuits to collect delinquent assessments and or dues are on the rise. Previously if you didn’t pay your HOA dues, your HOA would simply record a lien against your property and threaten foreclosure. This typically prompted homeowners to bring your their HOA account current.
Nowadays, many people are simply walking away from their homes. Either their homes are underwater (they owe more than their home is worth) or they just simply cannot afford to make the payments on their home. When a homeowner walks away from their home, they typically stop making payments to their HOA. This results in HOAs not brining in as much money as they are used to bringing in and difficulty funding HOA operations.
If your home is underwater, it doesn’t make much sense for your HOA to foreclose on your home. So your HOA is forced to file a lawsuit against you seeking a judgment for the unpaid HOA dues, leaving you aaking, “can my HOA sue me after I filed bankruptcy?”
Many people whose homes are underwater, file a bankruptcy to avoid liability on their 2nd mortgage or simply because they have suffered financial misfortunes and need to get out of debt and get a fresh start. When you file bankruptcy, your liability for HOA fees incurred up until the date of your bankruptcy filing is usually eliminated. However, you remain liable for HOA fees after bankruptcy for so long as you own your property.
When dealing with the subject of HOA fees and bankruptcy, I have come across many clients and professionals who are misinformed as to the current state of the law. It used to be that you were only liable for HOA dues after bankruptcy if you maintained possession of your home or rented it out. However, the law changed in 2005. The current law provides that you are liable for HOA fees as long as you are the owner of your property.
So even if you filed bankruptcy and gave up your property (walked away from it), you are still liable for HOA dues until either you sell your property or your lender completes the foreclosure. You are responsible for HOA dues for as long as you are the legal owner of your property. If your lender does not complete a foreclosure sale for 12 months, you are liable for all HOA dues incurred during that entire 12 months.
If you are giving up your property, don’t think that just because you file for bankruptcy your liability for HOA fees will be guaranteed to be over. You must be proactive to make sure you get your name off title, either through a sale, short sale, foreclosure, or deed in lieu transferring title back to the bank. As long as you are on title, you are responsible for HOA fees. As long as you remain on title to your property, you are responsible for HOA fees after bankruptcy.
You may be more at risk of losing property if you don't file bankruptcy, as creditors can sue you and attach your bank accounts, garnish your wages and attach and seize your property. As a result, you may miss your rent, mortgage or car payments, making it difficult to provide even your most basic necessities.
2. When do I get relief from creditor harassment? Immediately. As soon as you come into our office, we will give you a client record number and you will then refer all future creditor calls to your bankruptcy attorney. No more credit card payments and no more harassment immediately upon retaining a bankruptcy attorney.
3. Does my spouse have to file jointly with me? If all or most of the debts are in your name only, your spouse may not have to file. Creditors usually cannot pursue a non-filing spouse, unless he or she is legally a co-debtor on the debt. Additionally, the bankruptcy should not be reflected on the non-filing spouse's credit report. The law does vary, however, from state to state so make sure you ask a bankruptcy attorney about whether or not your spouse has to file.
4. Who knows about my personal bankruptcy case? The only parties that receive notice of the bankruptcy are your creditors, the bankruptcy court and the IRS. Generally, the bankruptcy will have no effect whatsoever on your taxes. Your employer will not be notified of the bankruptcy unless your employer is also a creditor. The bankruptcy is public record, so anyone who wants to find out could determine that you have filed. Generally, however, only you, your creditors and the IRS will know about the bankruptcy.
5. Will I be able to rent after I file personal bankruptcy? There were over 1 million bankruptcies filed in the United States last year alone. Common sense will tell you that these people are not all living on the street. If you are presently renting a home or apartment, usually your present landlord will renew your lease without running an updated credit report, and will have no knowledge that you even filed a bankruptcy.
If you are applying for a new lease, there could be some slight difficulties that can easily be overcome. We have found that larger leasing companies usually have stricter policies regarding leasing to applicants with blemished credit. Remember that it is the blemished credit report, not necessarily the bankruptcy that is reflecting poorly on your application. Also, with no outstanding debt, you may appear to be a better risk than other applicants who have outstanding debt and blemished credit reports. We find that a good faith gesture, such as offering an extra month security deposit, may be enough for a potential lessor to overcome her concerns about your blemished credit.
6. How do I know if I should file personal bankruptcy? *Are you calling because you are being sued??If you are being sued, and you own a home, we strongly urge you to speak with a client representative immediately about filing a bankruptcy. A bankruptcy will stop a lawsuit immediately and prevent your creditors from placing a lien on your home or garnishing your hard-earned wages.
*Is your home being foreclosed or is your car about to be repossessed? If it is, very often bankruptcy may prevent the foreclosure action or repossession from proceeding and allow you to consolidate your mortgage arrears or automobile balance and make payments on those debts over time through a payment plan designed by us with your help. If your house is being foreclosed or your car is about to be repossessed, Chapter 7 bankruptcy may not be an option. Chapter 13 bankruptcy may save your house and your car.
*Do credit cards or medical bills have you so deep in debt that it is hard for you to save for the future? If you are only paying the minimum payment on the credit card bills from month to month (generally from two to three percent of the outstanding balance), and the interest rate is only 15%, you will take about 20 years to pay off a $10,000 debt. Do you really want to be in the same financial situation in twenty years? Chapter 7 bankruptcy can provide you with a fresh start that you are entitled to under the law and get you out of debt NOW.
7. Is filing personal bankruptcy immoral or does it make me a bad person? Everyone is entitled to a fresh start. Many times, events occur in people's lives that cannot be expected. You may have had a sudden loss in income, a family medical catastrophe, a work injury, or any one of numerous other difficulties that would have been almost impossible for which to plan. Most of the people that we represent are good people who have encountered unfortunate circumstances and just want to get a fresh start. We understand that for most of our clients bankruptcy is the last resort. Many of our clients have a very difficult time determining if personal bankruptcy is the right decision for them.
You must ask yourself? Are the credit card companies concerned about your financial difficulties? Are you paying your creditors instead of saving for your children's education or your retirement? When is the last time you took a vacation? We believe that it is very important for an attorney to provide both bankruptcy and non-bankruptcy alternatives. We believe in giving you our honest opinion as to what will put you in the best possible financial condition now and into your future. The client always comes first. Please call, at (407) 556-7078 to speak with a bankruptcy attorney about the issues you should consider when deciding whether or not bankruptcy is for you.
8. How do I choose a personal bankruptcy attorney? When considering filing a personal bankruptcy, you want to be advised by someone who is familiar and experienced with all of the "ins and outs" of bankruptcy law. Especially when you own a home or car or have other assets that you are trying to protect. At The McArthur Law Firm, we spend almost all of our time on bankruptcy and getting people just like you out of debt. We will provide you with a range of fair fees right over the phone. Beware of any bankruptcy attorney who refuses to give you a fee quote over the phone. We always quote you a fee right over the phone, before wasting any of your time.
Many bankruptcy attorneys charge fees of $2,000 or more for a straight forward Chapter 7 bankruptcy. At The McArthur Law Firm we do not believe that a consumer debtor should have to pay that much money to get a fresh start. We provide high quality legal representation, often at a fraction of the cost.
9. Can I get rid of student loans or tax debts? Any bankruptcy attorney must have a sophisticated understanding of bankruptcy law to deal with student loan and tax debts. Until October 1998, student loans were discharged through Chapter 7 bankruptcy if the first payment on the loan became due more than seven years prior to the date of filing. In October 1998, President Clinton signed a new law into effect that disqualified all student loans from discharge. Legal Helpers can still help you obtain relief from your student loan debts through the use of Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, our attorneys can consolidate your student loan debt, along with any other outstanding bills, and arrange an interest free repayment plan, so that you do not have to suffer through the burden of garnishments, harassment and other collection efforts by student loan agencies. We may even be able to reduce the amount paid to the student loan agency during the course of your Chapter 13 bankruptcy so that your consolidation payment is as low as possible. If you would like to find out more about how The McArthur Law Firm can ease the burden of student loan debts through the use of Chapter 13, call at 407-556-7078 to speak directly with a bankruptcy attorney.
Tax debts are generally subject to discharge only if you file personal bankruptcy more than three years after you file a timely, truthful tax return. If your return is filed late, the taxes are generally discharged only if you file bankruptcy more than two years after filing a truthful tax return. Of course, these are general rules and you should speak with a client representative who will perform a detailed analysis of these issues.
10. Can I get credit after filing personal bankruptcy? Although bankruptcy may legally be reported to your credit report for up to 10 years, you can begin to reestablish your credit immediately. Remember that "credit" is your ability to borrow money. Lenders consider many factors while determining whether to loan you money, but most importantly, they consider your debt-to-income ratio. You are probably visiting this site because you already have more outstanding debt than you have the ability to pay. So, arguably, you do not have credit.
Filing eliminates most, if not all of your debts, therefore reducing your debt-to-income ratio, potentially improving your ability to borrow money in the future. Some financial institutions actively solicit business from people who have filed. Lenders are in business to make money by lending you money and charging you interest. Lenders know that once you have filed, you will not be able to file again for 6 years.
Many of our clients have purchased cars immediately upon receiving their discharge orders. Many lenders have programs that provide for post-bankruptcy borrows to obtain home financing within a year or two after a discharge. Many of our clients even receive solicitations for unsecured credit cards almost immediately upon receiving their discharge. The McArthur Law Firm just wants to advise you to be careful not to get back into the credit card "trap".
11. If I have used my credit cards can I still file for bankruptcy? The Bankruptcy Code provides that if a person incurrs debts on a credit card totaling more than $550.00 within 90 days prior to filing a bankruptcy case, there is a presumption that those debts are non-dischargeable and will likely have to be paid back. However, this rule only applies to purchases for “luxury goods or services.” See 11 U.S.C. § 523(a)(2)(C). What are considered “luxury goods or services?” The Code states that “luxury goods or services does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.” 11 U.S.C. § 523(a)(2)(C)(ii)(II).
12. Can my HOA sue me after I file bankruptcy? HOA lawsuits to collect delinquent assessments and or dues are on the rise. Previously if you didn’t pay your HOA dues, your HOA would simply record a lien against your property and threaten foreclosure. This typically prompted homeowners to bring your their HOA account current.
Nowadays, many people are simply walking away from their homes. Either their homes are underwater (they owe more than their home is worth) or they just simply cannot afford to make the payments on their home. When a homeowner walks away from their home, they typically stop making payments to their HOA. This results in HOAs not brining in as much money as they are used to bringing in and difficulty funding HOA operations.
If your home is underwater, it doesn’t make much sense for your HOA to foreclose on your home. So your HOA is forced to file a lawsuit against you seeking a judgment for the unpaid HOA dues, leaving you aaking, “can my HOA sue me after I filed bankruptcy?”
Many people whose homes are underwater, file a bankruptcy to avoid liability on their 2nd mortgage or simply because they have suffered financial misfortunes and need to get out of debt and get a fresh start. When you file bankruptcy, your liability for HOA fees incurred up until the date of your bankruptcy filing is usually eliminated. However, you remain liable for HOA fees after bankruptcy for so long as you own your property.
When dealing with the subject of HOA fees and bankruptcy, I have come across many clients and professionals who are misinformed as to the current state of the law. It used to be that you were only liable for HOA dues after bankruptcy if you maintained possession of your home or rented it out. However, the law changed in 2005. The current law provides that you are liable for HOA fees as long as you are the owner of your property.
So even if you filed bankruptcy and gave up your property (walked away from it), you are still liable for HOA dues until either you sell your property or your lender completes the foreclosure. You are responsible for HOA dues for as long as you are the legal owner of your property. If your lender does not complete a foreclosure sale for 12 months, you are liable for all HOA dues incurred during that entire 12 months.
If you are giving up your property, don’t think that just because you file for bankruptcy your liability for HOA fees will be guaranteed to be over. You must be proactive to make sure you get your name off title, either through a sale, short sale, foreclosure, or deed in lieu transferring title back to the bank. As long as you are on title, you are responsible for HOA fees. As long as you remain on title to your property, you are responsible for HOA fees after bankruptcy.
Bankruptcy Resource Center
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Bankruptcy Links & Resources:
THE FAIR CREDIT REPORTING ACT TITLE 11 UNITED STATES BANKRUPTCY CODE (including chapters 7 and 13) ABI Bankruptcy Statistics Congressional Budget Office Statistics Automobiles Find information on the value of used automobiles: Kelly Blue Book Edmunds.com Houses Find the projected value of a home: HomeGain Housevalues.com Home Fair Value Valuations Credit Reporting Agencies Agencies that provide credit reporting data. Check all three agencies because each reports its data differently. Equifax Trans Union Experian |
Rebuild Credit - There is Life After Bankruptcy! Home Equity Loans are typically unavailable for credit scores under 620. Your ability to rebuild credit after filing bankruptcy is better than it has ever been. After you get your discharge, you will receive many solicitations from lenders offering to finance homes, vehicles and credit cards.
Here are some tips to responsibly and successfully rebuild credit: 1. Open a checking or savings account. Lenders may look at this to determine if you can responsibly handle money. 2. Apply for store and gas credit cards that you would normally pay cash. 3. Apply for a secured card where you deposit cash and charge against it. Pay advances back over two months so that they will be reflected as positive marks on your credit report. 4. Pay your utility bills and rent on time for at least a year. 5. Find a friend or relative to cosign for you on a loan and pay it on time. 6. Look for car dealers and mortgage brokers that attest to be "bankruptcy friendly". Buy a used car so you do not get hit with the depreciation that occurs during the first two years of a new car purchase. 7. Stay away from payday loans that are at high interest rates and are a "bad credit" trap. 8. Write a letter to each credit reporting agency explaining the circumstances that lead to you filing. 9. Live within your means. Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle. 10. Pay your reaffirmed, pre-bankruptcy debts on time. |
Watch out for predatory credit-counseling firms You may have seen the attractive commercials for Credit Counseling Companies as opposed to bankruptcy firms that offer immediate debt relief. Before one elects for this option, it is important to have a full understanding of what Credit Counseling can accomplish for your particular case.
Consumers need to be especially cautious when considering using the services of a credit-counseling firm because it has led to an alarming number of cases in which a consumer's debts skyrocket through no fault of the consumer.
According to the Better Business Bureau, as the number of Americans seeking assistance from credit-counseling firms has increased, so has the number of complaints against credit-counseling firms. In 2003, the Better Business Bureau recorded six times the number of complaints as it received in 1999, a mere four years earlier. Consumers need to be especially cautious when considering using the services of a credit-counseling firm.
Currently, the Federal Trade Commission, as well as Attorneys General from four states, are investigating and prosecuting some credit-counseling firms for engaging in deceptive business practices. Furthermore, the U.S. Senate is holding hearings on what one insider terms "predatory practices" in the credit-counseling industry. In certain cases, the firms are said to have misled their clients regarding their fees, as well as whether the fees would offset the individual's debts. In other cases, credit-counseling firms are charged with accepting consumers' payments but neglecting to pay their bills in a timely manner.
According to financial experts in the field, some credit-counseling firms will offer you a free financial review and will not begin to discuss a debt management plan with you before examining your situation with due care. Other credit-counseling firms may charge you a small upfront fee, as well as a monthly transaction fee, but you need to ensure that the firm's payment cycle coincides with the due dates for your original debts. If the credit-counseling firm does not pay your bills on time, you can be held liable for any accrued interest and late charges. Once these charges begin to mount, your chances of escaping from your debt will decline sharply.
The moral of this is that all consumers need to look beyond the appealing commercials that promise debt relief via immediate credit counseling. A consumer's failure to investigate a credit-counseling firm can result in increasing his debt ratio.
Consumers need to be especially cautious when considering using the services of a credit-counseling firm because it has led to an alarming number of cases in which a consumer's debts skyrocket through no fault of the consumer.
According to the Better Business Bureau, as the number of Americans seeking assistance from credit-counseling firms has increased, so has the number of complaints against credit-counseling firms. In 2003, the Better Business Bureau recorded six times the number of complaints as it received in 1999, a mere four years earlier. Consumers need to be especially cautious when considering using the services of a credit-counseling firm.
Currently, the Federal Trade Commission, as well as Attorneys General from four states, are investigating and prosecuting some credit-counseling firms for engaging in deceptive business practices. Furthermore, the U.S. Senate is holding hearings on what one insider terms "predatory practices" in the credit-counseling industry. In certain cases, the firms are said to have misled their clients regarding their fees, as well as whether the fees would offset the individual's debts. In other cases, credit-counseling firms are charged with accepting consumers' payments but neglecting to pay their bills in a timely manner.
According to financial experts in the field, some credit-counseling firms will offer you a free financial review and will not begin to discuss a debt management plan with you before examining your situation with due care. Other credit-counseling firms may charge you a small upfront fee, as well as a monthly transaction fee, but you need to ensure that the firm's payment cycle coincides with the due dates for your original debts. If the credit-counseling firm does not pay your bills on time, you can be held liable for any accrued interest and late charges. Once these charges begin to mount, your chances of escaping from your debt will decline sharply.
The moral of this is that all consumers need to look beyond the appealing commercials that promise debt relief via immediate credit counseling. A consumer's failure to investigate a credit-counseling firm can result in increasing his debt ratio.
The information contained on this website is for general informational purposes only. Nothing on this website or associated pages, documents, comments, answers, or email communications should be taken as legal advice for any individual case or situation. The information on this website is neither intended to create nor does it constitute an attorney-client relationship.
