The Perils Of Debt Consolidation Services
A wide variety of debt consolidation organizations advertise to those in financial distress. They run radio and television ads promising to help you get your head above water and solve your debt issues. Most of these companies allege that it will cost you hardly a thing and afterward, you will be debt free.
Unfortunately, these promises are not always true. In fact, many of these debt consolidation companies are under investigation. Do not put your future in the hands of just anyone. Our attorneys at Robinson Salyers, PLLC, in Shelbyville and Frankfort can help you determine which debt relief solution best fits your needs. They will help you weigh both bankruptcy options (Chapter 7 and Chapter 13) and nonbankruptcy options such as debt consolidation, loan modification and mortgage settlement.
Debt Consolidation Program
When you sign up to consolidate your debt through one of these organizations, you make payments to them, rather than your creditors. First you must pay the company a fee for it to begin negotiating with your creditors. Not all creditors will go along with these programs and may instead continue their collection efforts, including repossession, foreclosure and garnishment.
There could also be significant tax implications. If your creditors take less than what you owe, they may notify the Internal Revenue Service of the amount of canceled debt. You will then have to pay taxes on that amount as if it was income.
With bankruptcy, you can avoid these problems.
- The moment you file for bankruptcy, creditors must stop all actions — this includes calls, letters, garnishments, foreclosures and more.
- Any debt that is eliminated in bankruptcy is tax free. You do not pay taxes on it.
- Under Chapter 13 reorganization plans, your creditors must accept whatever amount you can pay according to the terms of your plan. With Chapter 7, all unsecured debt, such as credit card and medical bills, is discharged.
We Offer A Free Telephone Consultation
If you need experienced debt counseling you can trust, our lawyers at Robinson Salyers, PLLC, can help. To schedule a free initial telephone consultation, call one of our Kentucky offices: Shelbyville at 502-220-4439 or Frankfort at 502-257-5417. You can also contact us online.
Pitfalls Of Debt Consolidation In Kentucky
Debt consolidation companies make a lot of promises. You have probably been bombarded with advertising from debt consolidation companies that claim they can help you eliminate your debt. Perhaps you have even considered going to one for help. Unfortunately, the vast majority of debt consolidation companies are scams.
Before you contact a debt consolidation company, speak with a qualified bankruptcy attorney. In addition to providing many of the same services debt consolidation companies offer, our attorneys at Robinson Salyers, PLLC, offer something those companies cannot: legal representation.
Debt consolidation companies promise to consolidate or negotiate your debt; all you have to do is send them a fee. Many people have done this, only to face lawsuits by creditors who were supposedly part of the debt consolidation program. If you are being sued by a creditor after sending money to a debt consolidation firm, our lawyers can advocate forcefully on your behalf. In some cases, it is possible to recover money paid to debt consolidation companies by filing for Chapter 13 bankruptcy.
Debt Negotiation Attorneys In Central Kentucky
Before you give any money to a debt consolidation company, contact an attorney like our founder, John Christopher Robinson. He can negotiate with creditors for offers in compromise. Creditors prefer to get some money rather than no money at all, so they are often willing to accept less than what you owe. When negotiation is not enough, bankruptcy is an option that will allow you to restructure your debt or eliminate it altogether.