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Is Consult America And Credit Advocates Law Firm My Best Solution? – Robin

“Dear Steve,

We are currently $72,000 in credit card debt and personal loan (Capital One). My husband is quite ill and had to retire. I have been current on all my debt and paid it down considerably over last 2 years (I have paid aproxx $20M0 Now with my husband not working I don’t thinkI can hang on.

Have you heard of Consult America who is related to Credit Advocates Law Firm.? They have given me a proposal for what they call a “financial hardship program” whereby they will work with creditors to settle debt.

They say they are not a standard settlement company and that they handle any and all summons/lawsuits that might result. They claim the have excellent relationship with all of our creditors and they wouldn’t “accept” us if they didnt. They have a 36 month program whereby they show us being debt free at the end of the program. They sent me papers and said I have to meet with a local attorney or paralegal to go over it all before program can start.

I dont’ know what to do. I am afraid I will not be able to continue the $2900 a month I am paying all the creditors. The big one is $827 in a personal loan to Capital One for 2-1/2 more years. and also BOA of $510 a month for 3 more years. I bring home approx $60 00 a month. We have a first and second mortgage of $1600. Our 1st will be paid in 2-1/2 yrs. I can’t get anyone to talk to us about refinancing and using equity in our house because of our debt to income ratio. Do you know if these people are reputable and do you have any other suggestions. I am about to lose my own health over this mess.

Robin”

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The Answer

Dear Robin,

I’ve previously written about Consult America and people have brought Credit Advocates Law Firm to my Attention. Last I checked, Ryan Sasson was a part of Consult America and he now works for Legal Helpers Debt Resolution.

One of the issues I raised before about Consult America is that they claim to be located at 1400 Broadway, Manhattan, NY 10018 (source) but New York does not have a company by that name registered to do business.

Is Consult America And Credit Advocates Law Firm My Best Solution?   Robin

I’m very concerned that someone may be selling you into a program or solution that does not make sense for you. Your life is already full of stress and your husband is quite ill. You even say you are about to lose your health over this.

If you do go the settlement route and you can’t settle quickly because you don’t have cash on hand to settle, you will have to save cash over a long period of time and probably do that by not paying your creditors. The settlement company may even take their fees in advance of settling any of your debt and not refund fees if they are unable to settle. But that’s not even the most worrisome part. You see there is no guarantee settlements will occur. On top of all the other stress and worry you have now you’ll have to worry about a creditor suing you and placing a lien against the house or garnishing your wages when you stop paying.

I just can’t see how that additional emotional baggage is going to improve the quality of life from where it is now.

Before you do anything you should click here to find a local bankruptcy attorney who will evaluate your situation for free. Since you have so much equity in your house a chapter 13 bankruptcy may make perfect sense. It would allow you to keep your house, pay creditors what you can actually afford to, and discharge the rest of your unsecured debt at the end of your payment plan. Best yet creditors would not be able to sue you or hassle you.

I’m curious, what fees were these companies going to charge you for this service? I’m a bit suspicious because typically the face-to-face meeting setup you describe is to get around the rules of charging fees before delivering the work. It’s a loophole in the law some exploit.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

Is Consult America And Credit Advocates Law Firm My Best Solution?   Robin
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • sibley

    These are the same people who owned The mortgage law group, LHDR Legal Helpers and Consumer First legal Group!!!!!!!!!!

    They are all crooks, I talked to a Lawrence T Chon and he sounds like a lowlife…

    I checked them out online and was SO thankful I didnt give them my personal information…

    They are run by Jeff Aleman and Tom Macey who are wanted by every attorney generals office in the country…

    they have paid off as many people as possible and open and close businesses long enough to take peoples money and homes then close when they feel too much fire on their asses

    STAY AWAY from them! SCAM SCAM SCAM

    • ray

      Thanks Guys,
      I have signed up with them but now am getting out i hope.

  • sibley

    These are the same people who owned The mortgage law group, LHDR Legal Helpers and Consumer First legal Group!!!!!!!!!!

    They are all crooks, I talked to a Lawrence T Chon and he sounds like a lowlife…

    I checked them out online and was SO thankful I didnt give them my personal information…

    They are run by Jeff Aleman and Tom Macey who are wanted by every attorney generals office in the country…

    they have paid off as many people as possible and open and close businesses long enough to take peoples money and homes then close when they feel too much fire on their asses

    STAY AWAY from them! SCAM SCAM SCAM

  • Truthtruth799

    Robin, I used to work for that company. Do not work with that company. If you need to speak email me at [email protected]. I believe you received a mailer stating you were approved for a loan. When you called in they stated they couldn’t approve you because you of your debt to income, or no equity, etc. it is a switch and bait. Plus their fees are so high you cant settle your debt. 

    • Rose

      I am in credit card debt also. I have inquired about bankruptcy and this will not be an option at this point. I am currently on all of them. I received a letter about consolidation from Consult America.and they did have me send my cc statements. I also had an application over the phone. They asked for an account number to pay the settlement payment as well as my SS number. I am suppose to get a final call tomorrow to finalize the settlement payment. What do I do to stop it and undo the damage I have dine by giving the information to them. I will call my bank in the morning but I am not sure what else to do or what to say to them when they call in the morning. Please advise me. I would greatly appreciate it. Thank you.

      Anonymous

      • http://GetOutOfDebt.org Steve Rhode

        If you don’t want to do it, then don’t sign an agreement or give them your bank information.

        I urge you to follow my two guides to evaluate your choice of any company.

        The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line

        How to Check Out a Business or Company to Avoid Getting Scammed or Ripped Off

        You can look at the related articles section of this post to see what has been written about them in the past. The comments on any relevant post may be enlightening as well.

      • Bart

        Steve,

        I began “working” with this company to explore options for debt relief before coming across the information provided here. I provided them personal information including my credit card statements and SSN, but have not finalized an agreement or signed the paperwork. I will not move forward with them. How concerned should I be about the personal information they have on file. Are there steps I can take to protect myself?

        Thanks so much for all of the work that you do.

      • http://GetOutOfDebt.org Steve Rhode

        Honestly, not really. But if you let them know about your concerns and explain to them you do not plan to move ahead, I doubt they would sell your SSN to other. You contact information may be though as a lead for some other product. I do not know that for a fact but it is always a reality with many debt relief companies.

        Bottom line, things should be fine once you confirm your intentions with the company.

  • anonymous

    I used to work for the Consult america 2 years ago. Consult america needs to be close down. They only help themselves. They eat up the saving reserves with high fees in the first 22 months of the program. They do not help people, they have young kids pitching a program they have no clue about. It is the wild wild west there. Lies lies lies…There are debt settlement companies that work because of lower fees.Consult america is a greedy company that does not care for its clients. More truths to come about consult america/credit advocates/debt logic.

  • Robin

    Thank you Steve. and how nice of you to answer me. 

    I think you are probably right in that this will end up getting me in to more trouble, although they guarantee that that handle everything if we get sued. Somehow that just doesn’t seem possible. Have you heard of this before?

    I am looking at the plan they sent. Of the $1235.36 monthly draft they propose,

    Months 1 & 2 show: $150.00 retainer fee (part of $900 attorney fee spread out over 8 months), $605.85 service cost, $420.26 settlement reserves, $79.00 legal admin fee, $10.25 banking fee.

    Months 3 through 8 the same except $50 less under retainer and $50 more to settlement reserves.

    Months 9-18 show $650.78 for service cost and $570.26 for settlement reserves, $79 legal admin fee and $10.25 banking fee.

    Months 19 through 36 no more service cost and $1176.11 settlement reserves and $79 legal adminfee and $1025 banking.

    Total Amt Debt $72,701.51. Estimated Settlmenet $30,534.63. Service Cost Percentage 15%. Estimated total fees & settlements $45,552.86 They also said it may even be less a owed as they “bundle” their offers to the creditors and sometimes even get more of a savings which they pass along to their clients. 

    Maybe a debt management would be better for us? I just feel like such a failure if we declare bankruptcy and welch on the obligations we have. I have never wanted to run from our mistakes and I know we did this to ourselves.

    • RobinHelper

      The 650 a month is where they are coming from of the 15% of debt fee. Its more than 11k. The 150 retainer fee at 8 months does not equal 900 – it is 1200. If it were 900 it would only take 6 months at 150 per month payment. Then there is the 79 per month for 36 months that adds nearly 3000 to the bill. The fees are more on the order of 22% of debt.
      Using the 16k in fees to fund settlements yourself will shave a whole year off of a program that has risks. The risks increase over time. Cutting 1/3 of the risk potential with better and more productive use of your available funds would just be smarter.
      You dont need to pay anyone to settle the debts when you can settle just as good or better than them.
      If you are serious about settlement and want someone to do the settling for you, try this approach:
      Save your money on your own. Each time you have saved up 25 to 40 percent of an account balance, contact a settlement service and ask them to negotiate a debt for you. Tell them you have x amount saved up to settle the designated account. Tell them you are only willing to pay a percentage of savings and refuse to pay more than 20% of the savings. Set a lower fee if you want. I dont think you will have any trouble getting a company to agree since it will be quick file work.
      Here is what may happen along the way – one of your creditors may send you an offer in the mail to settle at a fair percentage. All you have to do is follow the directions on the letter, call in and accept the deal. Sure there is a little more to it than that, but you have time to research and learn the ropes before that happens.
      Also, you may find you are able to pick up the phone after several months of being late and put a deal together with a bank on your own. Most direct with bank settlements will occur after you have missed 5 payments but before missing the 6th in a row. Here again you save fees.
      If you wind up needing legal help along the way, you can find it and it would be affordable on a per case basis as opposed to paying 16k to these guys.
      If you are serious about avoiding bankruptcy, than set yourself up to succeed by not paying a bunch of high fees. The high fees are what will lead to bankruptcy, not what will keep you away from it.
      Seriously. Try what I am suggesting. You can always file chapter 13 like Steve said if things get heavy and complicated. You have that option at any time. You cant just stop the chapter 13 after you are making payments to the trustee and then go with settlement – well you can, but that would suck and mean you did it backwards.
      If you want some help and education about this stuff there a couple companies out there that offer all the information and even a couple that hold your hand along the way for a way affordable price.

      Moral to this comment: Don’t pay high fees for promises that make you feel good. Don’t pay high fees at all. High fees hurt you and your chance at success. Get informed and involved in your own solution. If you hit a snag along the way, then talk to a professional and if you hire one, do it on a piece meal basis and you set the fee, not them.

      If you follow this advice you should come back to this page and post updates along the way. I am not kidding when I say you might help thousands of people who may read this page in the future by keeping them from making the high on fees large on promises debt settlement companies out there.

      Lose the stress by getting informed.

      • http://GetOutOfDebt.org Steve Rhode

        Good observations. Thanks for commenting.

    • http://GetOutOfDebt.org Steve Rhode

      I have heard similar stories before. Generally this help comes in the form of telling people to file this form or that but not having an attorney standing beside you in court. Regardless though, what would the defense be to the creditor claim you defaulted on the debt and are not paying it? Unfortunately in that argument you are setup to lose since that would be a factual condition and it is easy to prove you are not paying as agreed.

      The fees as you laid out certainly appear to be advanced fees before debts are settled. The FTC passed change to the Telemarketing Sales Rules aimed at debt settlement companies that prohibit such fees. But some attorney backed companies are claiming they have a loophole around the law and still charge those fees. And I’ve seen plenty of cases where people pay big fees, are unable to settle their debt, and companies refuse to provide refunds of fees.

      The biggest problem with advanced fees is they delay settlements and take money from you that could be used for settlements. The longer you delay in settling the debt, by having to pay advanced fees, the more likely it has appeared people are sued.

      From what you shared it appears you will be charged $10,905 in settlement fees plus $900 retainer plus $3,204 in monthly fees. This adds up to $15,009. That’s money that’s not going to repay your creditors.

      I clearly hear your statement about feeling like a failure, I felt like that when I went through my troubles. But that doesn’t mean that was an accurate perception.

      Please read this article that I wrote about what the reality of getting out of debt is about. http://getoutofdebt.org/24629/the-honest-and-unvarnished-truth-about-how-to-get-out-of-debt

    • Truthtruth799

      Robin,

      If you need help please email me at [email protected]. Do not work with consult america. They go under the BBB radar and complaints by use using debt logic as a parent company on the BBB so consumers cant find them. They are using young adults who have no background in finance to offer you a program them themselves have no ideal about. They want to you make the first two payments because they get paid if the client makes the first two payments. They do not care about you at all. Like Steve stated, there is no guarantees in this program. They give guarantees, and the contact is so vague, it is immensely favorably to consult america, not you. That company is a boiler room company. Do NOT work with them
      They probably asked you for your statements so they can do an analysis, and give you options. The only option they want to give you is debt settlement with HIGH fees. Ask them to put the guarantee in writing. Plus they do not have any type of relationship with the creditor. THEY DO NOT CARE ABOUT YOU, they act like they do, but they are out for their own pockets. Google LHDR COMPAINTS, they are the same company under a new name. 

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