Is Debt Consolidation Right for You?
If you hire a debt consolidation service, the best case scenario is that they will act in good faith and attempt to work with your creditors to consolidate your debt and negotiate lower payments. The question is: How are they going to get your creditors to go along with the plan?
In many cases, debt consolidation services have no leverage and no means of providing lenders with incentive to agree to a debt consolidation. If, after months of waiting, the company is not able to help you, you will be left with all of the debt plus months of interest and/or late fees. Plus, you probably paid good money to the debt consolidation service. More often than not, the fees are more excessive for less relief than a discharge in a bankruptcy.
The above scenario is based on the assumption the consolidation service is acting in good faith. Since these companies are largely unregulated, consumers are putting themselves at risk by handing money over to them. A bankruptcy law firm is backed by the power of the federal bankruptcy code. When you file for bankruptcy, you do not have to get your creditors to agree to the plan. It is enforced by the bankruptcy court.
Bankruptcy is not right for everyone, but those who it can help are usually at a disservice by hiring a debt consolidation service.
For a free initial consultation about filing for bankruptcy with Simon Resnik Hayes LLP, call 888.368.4099 or contact us online. Our offices are open weekdays from 7:00 a.m. to 7:00 p.m., and our attorneys serve clients in the Los Angeles area and San Fernando Valley through offices in Sherman Oaks and Los Angeles.
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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.