Debt and credit

Understanding Debt Settlement to Avoid Scams

calculationSometimes there are alternatives to bankruptcy, and depending on your particular situation one of those is debt settlement. Debt Settlement is a way of working with your creditors and debt collectors to settle your outstanding debts for less than the amount that you owe. Depending on the amount of money you owe, and the offer you make to settle, at times you can end up with just one lump sum payment or payment plans to get the debt paid off.

Most people use debt settlement to pay off past credit card debts, as they historically account for the largest type of consumer debt. But settlements might be possible in other situations as well. For example, medical bills are pushing people into bankruptcy, and many wonder if there is a way to create a debt settlement with medical bills. The answer depends on whether the medical provider still owns your debt. A good consumer law attorney will always be there to help you make the decision that is right for you.

No matter what, when it comes to debt settlement it is important be be aware of common scams.

Debt Settlement Scams provides a list of bad debt settlement companies with a history of problems. They have a list of complaints made to the Better Business Bureau (BBB) as well as state and national debt settlement companies that are misleading and targeting consumers. The Federal Trade Commission ("FTC") has a section of their website that is geared towards providing consumers with the proper ways to deal with debt. The FTC created a list of things to be aware of that should trigger your to think that the company that has contacted you may have ulterior motives. This list is:

1. The company asks you to pay fees before they will negotiate or attempt to "settle" your debt

2. Insists they are a "new government program" that will bail you out of debt

3. Guarantees they can make all of your unsecured debt go away

4. Tells you to no longer be in contact with your creditors, but doesn't explain what could happen if you do this

5. Tells you they can stop any lawsuit that may come your way

6. Guarantees that they can negotiate a settlement that allows you to pay off unsecured debts for nearly nothing.

Speaking with an Attorney

If you are contacted by a debt settlement company that insists any of those things, you can always contact an attorney to evaluate your case. Often times debt settlement companies don't insist you read the fine print. Additionally, they tend to fail to tell you that if you do not pay your debts your creditors may file a lawsuit against you to collect the remainder of the debt you owe.

An attorney can help you settle your debts in the same capacity as a debt settlement company, but they also can defend you and protect your rights. If you want to discuss what options are available in your particular situation, speaking with an experienced bankruptcy attorney is a great place to start. An attorney will be able to evaluate your case and determine the options available to you.

Steve Williams is a legal blog writer for Hoffman, Larin and Agnetti PA, South Florida’s premier bankruptcy attorneys. We offer personal attention and make sure that you understand the precise nature of your case and the legal principles involved. If you are looking for a bankruptcy attorney in Key West, look no further than Hoffman, Larin and Agnetti PA.

If you have any questions, please ask below!