• Home
  • Bankruptcy in Brief
  • ABC’s of Bankruptcy
  • Considering Bankruptcy
  • True Stories
  • Chapter 13
  • Blog
  • About
  • TOC

Northern California Bankruptcy Lawyer

On The Bankruptcy Soapbox

The Soap Box
  • How bankruptcy works
  • Mortgage Matters
  • Consumer Rights
  • Newsworthy
  • You & Your Lawyer
  • Small Business
  • Family Law

Who Needs This Kind Of Help With Debts

By Cathy Moran

bankruptcy alternativeEliminate your unsecured debt sooner than you ever thought possible.

That’s the promise of one debt settlement company.

It’s in their contract, not just their ads.  It must be so.

The pitch preys on people’s profound desire to do the right thing.  Most people want desperately to pay their debts and avoid the “horror” that is bankruptcy.

After all, the people who sell alternatives to bankruptcy and the creditors all say bankruptcy is horrible.

So let us “help” you, they say.  Sign our contract, send us money, and we’ll handle your debts for you.

Well, one such debt relief  outfit is learning that selling snake oil may no longer be such a good business.

Debt settlement folks sued

The CFPB has filed suit against American Debt Settlement Solutions and its owner for violation of federal law.  Steve Rhode, the “get out of debt guy” thinks debt relief industry had better take notice.

The new law CFPB has invoked addresses abusive financial services provided to consumers.  If a service or product takes advantage of the consumer’s lack of knowledge or understanding  about the material risks, costs, or conditions of the product or service, it’s prohibited.

That certainly covers this debt relief company:  they took an enrollment fee of 15% of the debt involved and charged $99/month for their services.

Only they forgot to tell its clients that it never settled or resolved a single debt for 89% of its clients.

If ADSS was a baseball player, it was batting 110.  Not a record that would keep you on many rosters.

I’ll be cheering on the CFPB.

Wrong debts get settled

But, even when debts get resolved by these outfits, too often it’s the wrong debts that are paid.

I saw that recently in a couple who came to me after completing a three year debt management company to resolve their credit card.  Why did they need a bankruptcy lawyer?

Turns out, not all the credit cards were included, and they had not paid their taxes or their student loans while feeding the debt management company.

Taxes and student loans aren’t dischargeable in bankruptcy;  the credit card debt could have been discharged.  They faithfully paid one set of creditors while they dug a deeper hole with creditors who are the Big Dogs in the debt world.

My charge to those in debt?  Any debt solution has to deal with the total universe of your debt.  It has to have a high probability of success, or it isn’t worth a nickel.

 Image courtesy of Artmaker.

More from the Soapbox

  • IRS Shakedown Happening In Bankruptcy CourtIRS Shakedown Happening In Bankruptcy Court
  • Katrina as a model for debtorsKatrina as a model for debtors
  • Your Choices For The Underwater HouseYour Choices For The Underwater House
  • Claim Tax Deductions Lurking In Your Chapter 13Claim Tax Deductions Lurking In Your Chapter 13
  • What Can Bankruptcy Do About Back TaxesWhat Can Bankruptcy Do About Back Taxes

Filed Under: Managing Money

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Coronavirus & Your Finances

About The Soapbox

You've arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said "try").

Here, I allow myself to tell stories and express strong opinions on how I think law should work for the consumer and small businesses when it comes to debt.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

How Bankruptcy Works

Speak Fluent Bankruptcy: Guide To Essential Bankruptcy Terms

Bankruptcy has its own language.  If you are considering filing bankruptcy, it helps to know the language spoken there. Master just a couple of words and phrases, and input from a bankruptcy lawyer starts to make sense. So, in our continuing campaign for better understanding of bankruptcy, here's a dozen … Read more

More Posts from this Category

643 Bair Island Road
Suite 403
Redwood City, CA 94063
Phone: (650) 694-4700
Phone: (650) 368-4700

Categories

All content copyright © Moran Law Group. All rights reserved.