I Panicked and Called a Debt Reduction Company. I’m Afraid I’ve Walked Into a Scam. – Megan


“Dear Steve,

My husband and I currently have around 10-12,000 in credit card debt and medical bills. About 2 years ago, after our 2nd child was born we became unable to make the minimum payments on the credit cards (about 10 different credit cards) and we have also been unable to pay the medical bills from our son’s birth and from a few pediatricians and a couple of trips to the ER.

We were doing fine making all of our payments until my husband’s company stopped paying his medical insurance premium and we became responsible for it. That was the beginning of the end and the birth of our son was the proverbial straw that broke the camel’s back. SO…. nearly 2 years later and I have not made payments on any of the credit cards, Capital One is suing each of us (we had 2 credit cards with them, each of them for $500).

My husband lost his job 2 months ago and now our income is about $1600 a month, we have a $500 car payment and pay $800 in rent and utilities. When we originally were served the papers from the court (Capital One suing us). I panicked and called a “debt reduction company” I have been paying them $250 a month for the last 6 months, at this point I am pretty sure that I walked right into a scam as they have yet to settle any of my debt and with my husband losing his job we can not even make that $250 payment.

What is the worst that can happen in our current situation? Should we file bankrputcy?? We were advised that we would probably have to do it ourselves based on our extremely low income. We have no assets to speak of, we rent our living space, all we really own is our furniture and most of it is from thrift stores, nothing fancy! We are relatively young (26 and 30) and I am so afraid this is going to affect the rest of our lives. Our daughter is 5 and I know she can see how stressed out I am about this. I am so worried all of the time, I just don’t know what to do next! help!

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Dear Megan,

I’ve written about my concerns of debt settlement companies and also the success of the lump-sum debt settlement approach. In your particular situation, just based on what you’ve shared, I can’t really see where the monthly payment debt settlement approach is right for you.

It will take you a long time to save up enough money to save, and based on 15% fees for many of the debt settlement companies, all you are probably doing right now is just paying their fee out of your monthly $250 payments.

What concerns me most about bankruptcy is not that people file bankruptcy, but that people don’t consider bankruptcy for fear of how they might feel, if they did.

I think your situation is providing you with the answer. I’m a debt whisperer. LOL.

You situation is telling you that even $250 directed towards your debts is more than you can handle. So even if you had enrolled in a debt management or credit counseling program, instead of just a debt settlement program, I think all those options would have failed or be failing for you right now. Bankruptcy will eliminate your credit card debt, medical bills and stop the lawsuits.

While thinking of going bankrupt scares you for fear of how you will feel. It certainly seems like an appropriate solution based on your situation.

What you need at this time is not a solution that will patch your situation for a few months. You need a solution that alter the current path and allow you a fair and reasonable chance of getting out of debt. I think, for you, that’s bankruptcy.

I think you should still schedule a free appointment with a local bankruptcy attorney and go and talk about bankruptcy. You could still file for bankruptcy yourself but I would prefer to see you work with a bankruptcy professional, even if you have to pay and even if you think it’s easy.

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You are both young. You can rebuild your lives bigger and stronger. You owe it to your daughter to create an environment that fosters a better future rather than to perpetuate a situation without a resolution.

What you will learn from this experience will serve you the rest of your lives and help to make you stronger, as individuals, and as a family.

You little girl is picking up your vibes and the stress is impacting her. Please provide her with some comfort by doing what is best for you and your family, even if it is hard.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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