Eugene Cunningham, Esq
Attorney
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gcunningham@tikinc.com
If you surf the net or expose yourself to mass media virus, you should have noticed the plethora of advertisements for credit counseling and debt consolidation. This industry is booming because millions of people are in a cash-flow panic and are easy marks for "quick-buck" hucksters.
You should know that over 75% of those who seek credit counseling eventually declare bankruptcy anyway - having given away their last cash to their counselors and bankers. If a person needs to declare bankrupcy, he or she should do it quickly and as cost-effectively as possible, not bleed for months. If a person believes he or she can avoid bankruptcy, then they should act directly and not pay their last dollars just to avoid direct contact with the lenders. Be advised: debt counselors work for the bank's interest, not yours!
These companies are vampires, sucking the last blood out of already drained victims. They do nothing a person could not do for themselves. Credit repair, for example, is a do-it-yourself matter.
Don't believe me? Check out the Federal Trade Commission's home page:
Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can�t deliver. After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report; many simply vanish with your money. Credit Repair: Self Help May Be The Best
Or, check out this release:
By Brian Krebs, Newsbytes WASHINGTON, D.C., U.S.A.,
More than 180 Web sites promising consumers a chance to restore their damaged credit ratings for a small fee were put on notice today by the Federal Trade Commission (FTC) and 10 state attorneys general, who warned site operators to shut down or face legal action. The warnings, sent via e-mail this morning, resulted from an Internet fraud "surf" conducted by the FTC, ten state attorneys general, 29 Better Business Bureaus, and the National Foundation for Credit Counseling. The agencies began their search looking for credit repair banner ads that appeared to be making deceptive advertising claims or...." Why would a company interested in reducing debt call itself a credit counselor? Well, because credit counselors are bank-funded business. They think in bank terms, not debtor's terms. Their job is to stop customers from going into bankruptcy. The reason they are FREE is they are paid by the bank.Their expensive TV commercials always spin something like 'You are a good person wanting to do what is right, but need some help working with the banks. Call our not-for-profit company today.' How can they help you and have huge advertising budgets without charging you?
Think of credit counselors this way, if you want to buy a house should you believe the sellers realtor about everything? Or, would you trust an appraiser who wants to also buy the item you brought in? The more the counselors save the bank, the more the credit counselor earns. The hapless employee of the counseling service may not realize this, so they may be sincere when talking with you.
Anything they can do, you can do better.
Lawyers
There are lawyers who will act on your behalf. They are less sneaky vampires and more like upfront sharks. If you have a great deal of debt and some assets, you could consider using a lawyer if you have good prospects of a growing income or do not want to declare bankruptcy. (If you work for a bank or in the securities industry, bankruptcy is a serious black mark.) Of course, the lawyer is going to charge you to inflict pain on the lenders.
......Your Lawyer Should Discuss, Not Sell Bankruptcy
A good lawyer can back down a bank or business without doing much more than routinely defending the debtor. All he or she has to do cause a bank trouble is cut off talks and say, 'serve us at my office.' Then, enter an answer to the complaint.
No credit card bank wants to send an employee to some distant town court to prove the debtor signed the contract, and signed the credit card receipts - all of which must be shown in a contract action. They certainly do not want to hire local counsel whose first day of work may cost more than the disputed credit card balance. Lenders count on debtors defaulting. It all a "numbers game."
A debt defense lawyer will cost a client serious money, but it may be worth it. It all depends upon your situation. Just do not hire one out of anger, fear, or confusion. If a lawyer is scaring you into signing him, leave the office! What you need is objective counseling, not pressure. Trust me on this one, walk out.
If you are thinking of using a lawyer it is probably because you have some assets to defend, thus you should also consider bankruptcy. Do not shrink from the "B" word. Bankruptcy exists for a legitimate business reason; there should be little emotional or moral governance in the decision making process.
A lawyer will tell you if you have a legitimate case for court protection. He or she will have a feel for what constitutes a full liquidation, a reorganization, or a work-out with lenders. Again, if the lawyer demands a large sum of money, is filling out bankruptcy papers as you talk, and does not seem to be considering the merits of your case, walk.
My own background includes working for a major credit card bank and as a collections lawyer, so I understand the lenders; on the other hand, I have heard the collection's department of a bank complain internally that the bank was issuing too much credit to many customers. These managers were saying the bank was responsible for the debtors inability to pay. They were angry because they had to make the collections calls.
There comes a time, after trying to work through debt with creditors' collections agents, that debtors understand it is time to declare bankruptcy. Often, it is when a marriage has fallen apart or when a debtor's health is failing.
When the time comes for bankruptcy, I have a client sign a few forms and, then, tell them in three days all their creditors will be forbidden to contact them and that, in essence, when they walk out, they can begin planning a new life debt free. A few days later, they understand their lives have been freed of a terrible tension - its over.
Clients find nothing really happens other than the light company merely changes over the account name and may take a fair deposit. The phone company does the same. All the creditors they remain with transform into pleasant service providers. All this redemption comes from finally deciding you cannot make it the way things are and by filling out and filing very simple forms.
Do-It-Yourself?
The forms are simpler than IRS' forms, that is for sure. They are logical and self-explanatory. You can do them on your own, but it will take a long time and you may make a huge mistake. For example, if you forget to add a creditor - that creditor can still collect the debt even after bankruptcy! Or, if your numbers smell funny, the Court may deny your case as fraudulent.
......Get Your Files Together and DO SOMETHING! If You Are A Messy Record Keeper, Get HELP!
You can buy paper kits for some $20 and fill them out carefully. You will probably find yourself buying a book to help for another $20. If you are bright and organized, this path works fine. If you are not able to spend much time sorting through things or are messy with records, I advise you to not do things yourself. Actually, I advise getting outside help for everyone; even a cut-rate lawyer would provide more certainty than by doing it yourself.
For myself, I have used these forms and find keeping track of them and submitting multiple copies to the Court to be more time consuming and confusing than working through a client's case. Of course, lawyers use software. Bankruptcy, like bookkeeping, is a perfect use for automation. Good software is expensive, so rarely useful to debtors. As I come across computer-based solutions I will post them on this page.
SUMMARY
You can deal with your problems yourself just fine. You can clear up your records just by writing to credit reporting agencies and demanding a repair of certain items you find to be wrong.
You can get help, too, but first realize any deal that sounds too good to be true, probably is. Forget about getting a new credit card "even if you have bad credit." Those cards will keep you in a negative position. Forget about trusting do-gooders who take their pay from your adversary.
Check the Federal Trade Commission site for advice on all the scams aimed at vulnerable debtors.
Lastly, if you have no choice, decide to go bankrupt. Just do it - its a business decision. If you have stuff, some of it may be protected.
Feel free to email a question to the above address. Also, feel free to support this page via Pay Pal at getgene@hotmail.com.
