Several times each year one of our clients discloses that before contacting us about bankruptcy they had tried to settle their debts with the help of a debt settlement company they had found, usually online or on television. In every case the company led our clients to believe their debts could be settled without the need for bankruptcy. Our clients had frequently paid thousands of dollars to the companies with little relief to their overall financial situation. Even if one or two of the debts were settled it didn’t prevent bankruptcy because lawsuits, garnishments and other forms of debt collection continued despite their participation in the program. The debt settlement companies usually fail to make it clear that debt collection will continue and some creditors refuse to even negotiate with the companies. By the time a client has paid enough money into the “account” that will supposedly be used to pay a creditor off, the fees paid to the company far exceed what it would cost to file bankruptcy and be on the way to recovery.
In the last few months several of these debt settlement companies have finally started facing the scrutiny they deserve. In July 2012 one of the largest of these companies, Legal Helpers Debt Resolution, reached a $2.1 million settlement with the Illinois Attorney General over their misleading practices. And a class action settlement against Freedom Debt Relief was reached in May 2012 that will hopefully reimburse its former clients at least a portion of what they paid. Nancy L. Thompson Law Office, P.C. has been able to recover some of the funds paid my clients to these companies but some have gone out of business before reimbursement can be made. Before you agree to participate in one of these debt management programs contact Nancy L. Thompson Law Office, P.C. to discuss your options.