My husband and I find ourselves in an unfortunate financial situation (as do many!) and are considering a debt consolidation company. I have done some on-line research and it appears as Legal Helpers Debt Resolution, LLC is one of the more reliable. My are looking for consolidate and reduce credit card and medical bills. My husband was without income for almost a year and we find ourselves “in a hole” like never before. We have had large medicals in addition to huge credit card balances (needing the credit cards to pay monthly bills to keep our heads above water while he was unemployed). He is now working but at a much reduced income and we are just unable to climb out. My question: is debt consolidation a good idea? And also, is Legal Helpers Debt Resolution the company to go with? I researched them and they have an A rating with the Better Business Bureau. Any input from you would be appreciated! (The debt we are looking to consolidate is approx $20G) Thank you!
First off, one observation is that as of the time of publishing this question Legal Helpers has not yet embraced the call for openness and transparency in the debt settlement industry like US Debt Resolve has, click here. WIthout facts and information you have nothing to judge the performance of the company on other than what the sales person tells you.
Here is what the Federal Trade Commission says to look for when selecting a debt settlement company.
Avoid any company that promises to settle your debt if it:
- touts a “new government program” to bail out personal credit card debt
- guarantees it can make your unsecured debt go away
- tells you to stop communicating with your creditors
- tells you it can stop all debt collection calls and lawsuits
- guarantees that your unsecured debts can be paid off with pennies on the dollar
- requires that you pay the full fee within the first few months
You might want to use that checklist from “Settling Your Debts” as a guide in how to quiz the Legal helpers sales person.
But all of that aside, I’m at a loss to see how debt settlement would be my first recommendation in your situation. With such a big hole to crawl out of you need to ask yourself if you have a greater responsibility to fix the past or the future. Now that you are somewhat back on your feet at a reduced income I think your top priority should be to first build a solid financial foundation. I’m worried that all a debt settlement program might do is drag this situation out for years when you need relief right now.
I’d like for you to evaluate how much money you have leftover for debt payments after your expenses, an allowance for some fun and putting at least $100 in savings each month. This savings account, or emergency fund, is critical in your ability to protect yourself from a future financial surprise arising and leaving you in a really bad spot. You might want to use the budget information from my free eBook, “Eliminate Your Debt Like a Pro.”
It would be prudent and logical in your search to also talk to a bankruptcy attorney. Click here to find a local bankruptcy attorney. The appointments are typically free. But without the meeting with the bankruptcy attorney it sounds like you will only be making a decision on who to go with based on what a sales person tells you. I want you to make the best choice and decision for yourself and you can only do that by examining all sides.
Under bankruptcy you are probably eligible for a Chapter 7 bankruptcy, at least 75% of recent bankruptcy filers were. In a Chapter 7 bankruptcy all of your debt, including the medical debt, can be discharged, all collection calls will stop, lawsuits will be blocked and you will get a fresh start in months, not years. A Chapter 7 bankruptcy will run around $1,750 and when you compare that against a typical up-front fee settlement company fee of 15% of debt which would cost you $3,000, bankruptcy is cheaper.
If after meeting with the bankruptcy attorney, if you are still considering debt settlement and want an independent review of any debt settlement program, consider contacting