It is ironic that you may drown yourself deeper in debt when all that you may be trying to do is to get out of debt with the help of a debt settlement agency. The danger of enrolling in a debt settlement program without the help of a qualified bankruptcy attorney cannot be overemphasized.
In a recent case in New York, a consumer enrolled in a debt settlement program offered by a debt settlement agency to clear his credit card debts. He owed about $32,000 in credit card debts. The debt settlement agency set up a special account for him and asked him to pay $ 423.40 a month into that special account for 48 months or 4 years. The total amount to be paid into the account by the consumer at the end of the 4years was to be about $20, 323. The debt settlement agency in this instance made it clear to the consumer that they will only strike a deal with his creditors when this New York consumer’s payments reached an unspecified amount to pay off his debts. This meant that the consumer’s creditors could still garnish his wages and bring lawsuits against him while the consumer was paying into that special account and waiting for 4 years to reach a specified amount.
The agreement between the settlement agency and the consumer also provided that the agency would take 15 percent of the total debt as service fee. This service fee therefore totaled about $4,890. That was not all. The consumer also had to pay $40 as monthly service charge. Furthermore, the consumer had to pay $9.85 each month to the bank maintaining his account.
Adding all these fees and charges, the consumer would only be left with about $13,040 out of his total contribution of $20,323 to pay for his debt of about $30,000. This should alert all New York City consumers out there that the debt settlement agency in this instance and in most cases do not have the intention of helping the consumer to pay off his debts. They are just around to take advantage of your situation and milk you dry.
In this particular case, when the consumer realized that he could negotiate directly with his creditors and therefore decided to opt out of the debt settlement program, the agency told him that since he had decided to cancel the contract after more than 30 days had passed, he was only entitled to the money left in his account after all fees had been deducted and there was to be no refund. Shockingly, the debt settlement agency told this consumer that he had only $19 in his account after he had paid $1693.60.
Yes, it is unbelievable but it happens. The debt settlement agencies use the services of lawyers who carefully craft their contract. Why shouldn’t you, an individual also seek the services of a qualified New York bankruptcy lawyer before you enter into such a deal? The consumer in this instance was lucky because the court declared the contract illegal. You may not be that lucky. Your creditors might get to you first. Your creditors may drag you to court first before you realize you are being cheated by a debt settlement agency. You might be forced into bankruptcy and besides, there is all that stress in trying to get your money back from the debt settlement agency.
Before you seek the help from a debt settlement, debt negotiations or debt resolution company or agency, please seek the advise of a qualified bankruptcy lawyer near you in the Bronx, Queens, Manhattan, Brooklyn or any other part of New York City.
