I’ve met with quite a few people over the years that choose Debt Settlement Program over bankruptcy. What I have learned from them is those programs usually don’t live up to the expectations they create. I have represented many clients that filed bankruptcy after these programs failed to work.
Here are a few things about how the typical Debt Settlement Programs works: 1) You pay them a monthly payment that they ‘escrow’ on your behalf. Of course they pay themselves from those funds. After the ‘escrowed’ monthly payments you’ve made reach a certain amount, they try and negotiate a lower payoff amount with one of your creditors. 2) Keep in mind the entire time you are paying the Debt Settlement Program, you are not paying your creditors—the result is a continual reduction in your credit score. 3) The plan of the Debt Settlement Program is to eventually negotiate lower payoff amounts with each creditor and pay the creditors that reduced amount from your payments. This means your creditors forgive a portion of your debt and are paid the remainder of your debt. What the company doesn’t normally disclose is the amount of debt they were able to negotiate as forgiven by your creditors has to be counted as your income in your next income tax return filing.
When you are seeking affordable debt relief, you should first speak with an experienced bankruptcy attorney like myself. I can give you affordable debt relief options where you typically make smaller payments that those required by the Debt Settlement Programs and will result in those debts being legally erased where you do NOT have to count them as your income for income tax filing. Also, for most people, my debt relief options help increase your credit score instead of causing it to decrease. If you’ve talked to one of those Debt Settlement Programs and it sounds too good to be true, it probably is—call me today at 717-200-HELP or at 1-877-632-4656. Mooney & Associates has offices spread throughout Central Pennsylvania.