“Dear Steve,
I am having a rough time here with credit card debt being that I have been paying 30% in interest for the most part. I can’t get out of this debt and at 30% interest, the debt continues to grow. I found an ad in the Penny Saver for debt relief. I called and they have sent me some paper work. My room mate was helping me with the paper work and was a bit suspicious and began a search of the company, (CountryWide Debt Relief in Brea, CA). This is how I found you and I am now writing to you.
My roommate is saying that CountryWide Debt Relief is a scam. I am writing you to see if that is your conclusion regarding them too.
I am trying to get this financial mess of mine finished with and would like to NOT have to file bankruptcy if possible. I am 63 years old and I have had 2 heart attacks with a double by-pass surgery a little over 10 years ago, so I’m not sure how much longer I will be able to work and I don’t want to leave my family with all this debt being that at the time of the by-pass they gave me 10 to 20 years. I am now over the 10 year mark, thereby on “borrowed time”.
I have a “phone” interview with CountryWide Debt Relief this evening at 5 pm and I’m hoping to hear from you before that time. I have no idea where to start in getting this credit card problem resolved – bankruptcy or not. Any and all information/help you can send my way is appreciated.
Thanking you in advance,
Herman”
Dear Herman,
Here is what I can tell you.
Let’s put the situation into context. You are paying high interest rates, your medical history does not leave you predisposed to increased stress, and you have not indicated that you are unable to meet the current minimum payments.
I can see no reason how debt settlement would be a good solution for you at this time unless you want a slow trashing of your credit, collection calls and face being sued by your creditors.
The way debt settlement companies operate for the most part is they charge you large upfront fees that are paid in the first year of your program before you actually get the service you pay for. They will tell you to fall behind on your debts in order to settle the debts. This will start collection calls and can be a fast track to getting sued, a judgment against you and even your wages garnished.
Just recently one national debt collection company stated to the Federal Trade Commission that they have been instructed by their creditor clients to refer accounts straight to litigation if they are notified the consumer is in a debt settlement program. – Source
Additionally, most consumers never get the full benefit of debt settlement programs after they’ve paid thousands in fees. You may want to read The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.
I was disturbed to see on the CountryWideDebt Relief site the following statement. “Bankruptcy should be avoided if possible as it may have severe consequences on ones credit and may appear as a public record.” – Source. In my opinion that is totally misleading.
The moment you fall behind on your bills, as debt settlement companies instruct, your negative payment history will appear on your credit report for seven years. Same goes for any lawsuit against you by your creditors. So if we are going to compare apples to apples here while bankruptcy will appear on your credit report, so will the consequences of debt settlement.
Here’s another comparison. Debt settlement companies talk about three to five year plans but in the most common form of bankruptcy debts are eliminated in a couple of months, collection calls are legally blocked, lawsuits are blocked, wage garnishments are canceled and you can easily rebuild your credit after bankruptcy. You get none of those benefits with debt settlement.
Since you may be able to make your minimum payments and just want to lower the interest rates a better first approach would be to click here for credit counseling information. In a credit counseling program the hit to your credit would be minimized, the interest rates reduced and your creditors would gladly participate.
Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
If you talk to the credit counseling folks and don’t think that solution is for you then click here to find a local bankruptcy attorney and talk to them before you sign any debt settlement contract. While you may ultimately decide to not pursue bankruptcy, at least before you contract for debt settlement you will be fully informed and make an educated decision.
If time is of the essence of the three approaches the quickest way to eliminate your debt is with a Chapter 7 bankruptcy.
The least traumatic approach to your credit would be credit counseling.
The most stressful and least successful would be debt settlement.
In closing, let me quote CountryWide Debt Relief:
Countrywide Debt Relief, LLC. cannot force the negotiations and cannot force creditors to accept a settlement. Countrywide Debt Relief, LLC. does not make regular monthly payments to your creditors. Your creditors may continue collection efforts on delinquent accounts while you are enrolled in a Debt Settlement Program. Such collection efforts can include phone calls and letters to you, charging off the account, sending accounts to collection agencies or attorneys, lawsuits and even garnishments of your wages if a judgment has been obtained. Countrywide Debt Relief, LLC. makes no claim that it will be able to stop these collection activities. – Source
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