Know The Difference: Scams, Debt Management & Bankruptcy

Scams & Most Debt Settlement companies:

Ads that tell you, “You can get out of debt with no payments without filing bankruptcy”  are a scam. They promise to get you out of debt, but instead, they just steal your hard-earned money and leave you even deeper in debt. In our experience, most "Debt Settlement" companies are no better.  They promise to negotiate to get rid of some of your debt, but on condition that you first pay them all the money needed.  To get the money, they have you stop making payments to your creditors and, instead, pay the money over to them, after which they "claim" they will try to negotiate with your creditors.  "Try" is the operative word.  Your creditors do NOT have to "play ball".  In the meantime, because you are not paying your creditors: (1) Your credit score gets killed, (2) There is nothing to keep the creditors from calling and suing you, and (3) You are stuck dealing with the stress, worry and sleepless nights, worse than before.  Because of this, in most cases, things only get worse, not better.  Whatever credit you had is gone, and you end up with even more debt, stress, worry and sleepless nights.  For most people, Debt Settlement is no different than being scammed.

 
Debt Management Re-Payment Plans (sometimes misleadingly called "Credit Counseling" plans):

Debt Managements organizations promise to get you out of debt, but the best they can do is lower your interest a little on credit cards under credit-card-company-sponsored plans   Even then, they can only lower your interest on some credit cards. You still have to pay 100% of the balance owed, and you lose the right to use your credit cards while you are in the Debt Management plan.  Even worse, no result is guaranteed, and the rug can be pulled out from under you at any time,  Why?  Because your creditors are always in control and can refuse to "play ball" any time they wish.

Present	The promise	The result
Interest Debt	No Debt	Less Interest Debt

 
Bankruptcy:

Others promise, but only bankruptcy delivers. Only bankruptcy can actually gets rid of debt. Actually get rid of debt with basically the stroke of a pen.  Unlike everything else, when you file bankruptcy, you are "in control", instead of your creditors. The creditors have no choice.  They have to do what the Federal Bankruptcy laws allow you to tell them.  The results can be amazing.  That's the power of the U.S. Federal Bankruptcy laws.  Nothing in the world puts your creditors under control and gets rid of debt like filing bankruptcy.  

 
Disclaimer: Example concerns non-priority, unsecured debts, like medical bills and credit cards. Result shown assumes a Chapter 7 bankruptcy filing, and no excess equity or excess income.