Debt & Credit Card Consolidation Scams – Want to Waste your Money?

“Consolidate” your credit card debt away- guess again!

Lately, the radio is saturated with “debt relief” ads that brag “you have the right to settle your credit card debt for a fraction of what you owe” and other enticing sales pitches. Often they brag or intimate that they have inside information, new programs, “secrets the credit cards companies don’t want you to know” and other such snake-oil hogwash. My advice is to turn off the radio and read this blog post!

Don’t be fooled by these talk-radio shysters. There are two types of companies which advertise on the radio- debt consolidation and debt negotiation. The negotiation companies, such as, attempt to negotiate lower payments with your creditors, for either a flat fee or a percentage of what they save you. Usually the best they can do is get some interest and penalties waived. Once a case enters litigation, netdebt is unlikely to be able to negotiate anything with a collections law firm.

Debt consolidation is another heavily advertised gimmick. All these companies really do is collect a large monthly payment from you which is “set aside” in an escrow account. They then attempt to settle for a reduced “lump sum” amount with your individual creditors.- using your own money, of course!

Basically, you are paying a fee to the consolidation company to “save up” your own money (by paying it to them!) and they then contact your creditors by phone and try to settle your debts with the money that they hold in escrow. Of course, your creditors are under no obligation to negotiate with them, and  nothing whatsoever prevents a creditor from suing you at any time for the full amount due. Read this handy FTC website which explains these “debt consolidation” scam outfits in greater detail.

A big issue I have with these credit card/debt consolidation firms is that they do not analyze your debts for NJ Statute of Limitations issues. Remember, these “credit consolidation” hucksters are not attorneys and have absolutely no training or expertise in  New Jersey legal issues. The buyers of stale, charged-off debt must love these consolidation companies, since they routinely get paid good money on debts that would be laughed out of court if a suit was ever filed. It’s a windfall to the consolidation company, a gift to the debt buyers, and a lose-lose to the hapless, naive clients who are doubly throwing good money after bad.

For example, I recently had a potential client consult with me  who had already paid (via a notorious consolidation agency) over $4500 towards a debt that had a long-expired Statute of Limitations. That money is sadly now gone and completely wasted, along with the fees she paid the consolidation company to “handle” her debts. She may as well have just lit her money on fire! Has the creditors filed a Special Civil Part lawsuit against her, I could have had it dismissed on summary judgment based on expiration of the Statute of Limitations. She would have owed nothing to the collector, and my legal fee would have been but a fraction of what she wasted on the “consolidation” agency.

I often “beat” debt collection and credit card lawsuits altogether based on expired Statue of Limitations issues, forcing your creditors to walk away empty-handed. Only an experienced New Jersey debt defense attorney can analyze and advise you on Statue of Limitations defenses and issues, so call me today at 908-782-5313 for a FREE consultation about your Statue of Limitations issues. 

Also, the reality for many debtors is that a Chapter 7 bankruptcy filing often makes a lot more practical and financial sense than trying to “settle” multiple debts, especially if you have several creditors with large and recent balances. Only a licensed attorney can advise and assist you with filing for bankruptcy.

If you file and are granted a Chapter 7 discharge, your debts are wiped away and never have to be repaid, and all collection efforts must cease. The entire Chapter 7 process in New Jersey typically only takes about 10 weeks from filing to discharge, and my office charges a flat fee of $1750 for most Chapter 7 cases, which includes all court costs and filing fees as well. Call me today at 908-782-5313 for a FREE consultation about your bankruptcy case.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code



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