I don’t know any other way to put it than “Yes – finally!” May has been a real red-letter month for this Indiana bankruptcy lawyer. You know how, when you’ve been trying to convey an important message and so one seems to be paying attention? Then, all of a sudden – they get it? Well, that’s how I felt when I read about the two debt settlement companies that have been charged with fraud.
Now, certainly Mission and Premier are not the only financial firms that have ever been accused of bilking consumers. The reason this particular news is making such waves in the five Zuckerberg bankruptcy law offices is that this is the first time the federal watchdog agency, the Consumer Financial Protection Bureau, is the party doing the accusing. The sentiment one of my Bloomington bankruptcy lawyer colleagues expressed was “It’s about time!,
Mind you, I’ve spent 26 ½ years practicing Indiana bankruptcy law, helping clients stop foreclosure, get payday loan help, halt wage garnishments, and get back cars that have been repossessed. Over that time, I admit, I developed a very active dislike and disapproval of debt settlement companies, even of those that operate within the letter of the law.
You see, the business proposition simply does compute for clients. Here’s what I mean:
Clients are told to pay into an account and then stop paying their creditors.
Large (as large as 20% sometimes) upfront fees come out of the clients’ money before any debts are even discussed with creditors.
The creditors, meanwhile, have made no guarantees of settling for anything less than they’re owed. Late fees and penalties make the debt even worse.
Any money that does accumulate and is used to settle one debt means there’s no money for the other debts the consumer owes.
- Creditors can – and do – sue and garnish wages.
Can you see why I’ve been saying a big NO to this entire arrangement? Legal advice, not debt settlement, should be the first stop, not the final one, for any consumers who financial situation has started to spin out of control.
It’s true that the two debt settlement companies in the news this month angered authorities by falsely claiming to have a special affiliation with the federal government and by charging fees way beyond the legal limits. But what I’m hoping is that the negative publicity will shed light on ALL debt settlement companies and that people will realize this is a very bad business model, and not at all good deal for debtors.
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg