My wife and I currently owe about $27k in revolving debt, and she has recently lost her job and I am getting hours cut at my employment.
We realized that we were living paycheck to paycheck and that we needed to do something quick. I was approached by World Law Group and signed up with them just recently.
I read what you had to say about the agreement, and I am afraid we may have made a big mistake, as some of the salespersons claims do not jibe with what the agreement states. He said that World Law Group was a network of attorneys, and that we would be assigned an attorney in state that we could have regular contact with during the process.
They are collecting fees up front, and no significant money is going in to the escrow account till about a year’s time. Most all of our revolving credit accounts is within the 2-3k range, with the exception of Barclay bank which we have two $4k accounts with. Their claim of 40% settlement makes me nervous, basing it on a three year plan with a deposit of $524 a month into an account.
We will likely make additional moneys available as we can. We have yet to make our first payment, which is on the 25th, and we are current with our creditors at present, but doubt it will be possible much longer. We filed chapter 7 in 2002, and long story short, we have gotten ourselves in trouble again.
Is it pie in the sky to think they will realistically have a shot to settle our debt for 40% of what we currently owe, based on the small amounts of individual accounts, I was also wondering if it would be unlikely that they would sue us. I am afraid of all the fees and interest piling up and don’t know if this is worth trying to pursue or not. Thank you!
John
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Attorneys that actually do the work can easily settle accounts for 40 cents on the dollar or less with most creditors. Usually it’s between 20-30%. The problem for most people is having the funds available in a lump sum to do so. If the debt settlement company is slating the program to have 40% of total debt saved by the end of the program then the accounts should get dealt with. I’ve known 2 people who’ve used World Law and gotten good results. Neither has completed but the bulk of their debts have been settled 2/3 and 3/4 of the way through, respectively.
I don’t have any experience with World Law Group so any comments here by me are of a general nature referring to typical debt settlement “law groups” & NOT World Law.
I work with many settlement companies who do NOT charge up front fees. We provide their clients the option of having a local lawyer in the event they are sued. Paying before service in debt settlement is generally a well documented loser as 1) once the settlement company is paid, what do they care about obtaining great settlements? Performance based companies are usually paid a % of HOW MUCH THEY SAVE YOU AT THE TIME OF SETTLEMENT, so they truly have a vested interest in your success- or they don’t get paid! 2) Very often a client’s finances get better or worse in the course of a 3 year period. If your situation changes and you no longer need settlement services, World Law (probably) will not give you any money back- whether they do any work or not! 3) I have yet to see a “law group” that actually has attorneys negotiating settlements. 4) It is unlikely (but possible) that an attorney would litigate or even represent you in the event you receive a summons. Some “law groups” say they will, generally for a lot of extra money. If you are at your financial end, having to come up with a $1,000 for an attorney will be difficult- The worst part is, if it happens in 12 months, you won’t have ANY MONEY saved to settle the lawsuit in your account. If you were with a performance based company, you probably would have money. If you don’t, you will end up with a judgment and actually have PAID World Law for that result. Generally, once a lawsuit has been initiated the debt collector will not settle for less than 70-80%! Our experience, with our lawyers defending client lawsuits, averages less than 35% settlements!
There are many more reasons but you get the idea.
Hi John! First of all, it sounds like a debt settlement program could be a good solution to your debt situation, as long as you feel okay about being able to make the monthly payments the program requires. As to your two specific concerns, I agree with Michael in that I would doubt your debts will settle for 40% of the enrolled balance. Most settlement companies, from my experience, would be more around 40% of the balance at the time they settle. Depends upon specific creditors, but that would be a general rule I would follow. Regarding law suits, in a normal settlement program, over the 3 years or so program life I would fully expect at least one account to be sent to an attorney to at least present the possiblity of filing suit to collect. Check your contract to see what World Law says they will do if you get sued. Remember, even accounts with attorneys can be negotiated, though usually at higher rates. Wishing you all the best. Dave
Hi John,
Settling the debts is not a pie in the sky proposition. I do have some concerns for you given the information you provided.
Small balance accounts will grow from late pay penalties, increase default interest rates after the first couple missed payments and possibly other fees. If you are paying fees in advance and wont be settling for 12 months or more, some of the lower balances will double. Settling the accounts will work, but you wont be saving much.
Lawsuits are a real risk. The risks increase the longer the accounts remain unsettled.
If you don’t mind doing so, please reply in the comments and answer the following:
Name of creditor
Balance on each account
Interest rate on each account
What state you are in
If you can answer the above you will get helpful feedback.
Also, you do have access to chapter 7 bankruptcy again as it has been more than 8 years since you last filed.