Welcome to the A-B-Cs of Bankruptcy & Debt Relief for Real People
I’m, Gary Ray Fraley a California State Bar Certified Bankruptcy Law Specialist with my office in Sacramento CA. I’ve been practicing bankruptcy law for over 41 years.
Today I am going to discuss with you the first in a series of videos (of which this is a transcript of) on Debt Relief Companies
We have all heard the pitch on TV or radio. It goes something like this:
“If your credit card debt is out of control. If you’re in over your head in monthly payments, there is a SECRET the credit card companies don’t want you to know. If you have more than $5,000 in credit card debt you have the right to let us settle that debt for a fraction of what you owe. That is bad news for the credit card companies, but it is great news for you.”
That SOUNDS like they have some way to FORCE credit card companies to settle the debt. The real truth is:
Debt Settlement reality
1 They don’t. It is up to the credit card companies whether they are willing to settle for less, or on payments or wait while you settle and pay someone else first. Why should they?
2. Your credit gets much worse because the debt relief company tells you to stop paying on all the other credit cards even the ones you are current on.
3. Your creditors who did not agree to the debt relief plan like Chase can still sue you. Notice that they talk exclusively about Credit Card debt.
4. When you are sued the Debt Relief Company will charge you ANOTHER FEE for their “attorney” to negotiate with the creditor who is suing you.
5. Then the creditor gets a judgment against you. Now they can garnish your paycheck, levy your bank accounts and do other ugly things. Many people do not know they have a judgment against them until their paycheck is garnished or their bank account is seized.
6. On the debts the Debt Relief Company does settle for you, you pay them a hefty fee. It is not uncommon for you to pay 20% or higher in fees to the debt relief company.
7. On top of that, the amount the credit card company forgives is taxable income to you on top of your highest tax bracket.
8. Solving some credit card debt is worse than solving none at all. You can end up spending thousands of dollars and having years of bad credit only to owe even more money than when you started.
9. If you filed a Chapter 7 Straight bankruptcy, you can be rebuilding your credit almost immediately. Most people who file bankruptcy have a good credit rating within 2 years.
10. If you want to force the creditors to accept a payment plan, a Chapter 13 debt reorganization can do that. Chapter 13 the creditor gets no say in the plan. They can’t do anything but shut up and leave you alone. That’s the law.
11. The only secret the so-called debt relief companies don’t want you to know is that what they have no ability to control any creditor that does not want to work with them. What they do often is worse for you, your family, worse for your credit, and certainly more expensive than Bankruptcy.
Now you know the real secret that the Debt Relief Companies don’t want you to know.