Debt Settlement - Massachusetts

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Below we have provided answers to many of the common questions that we are asked by our clients regarding debt settlement options. If you would like more information please do not hesitate to call us at 508.655.5980 or e-mail us.

Should I try to settle my debts instead of filing bankruptcy?

If you are unsure whether or not you should file for bankruptcy, one good way to determine the value of bankruptcy is to first determine your total level of debt and how long it will take you to pay off your debt under your current budget. If it will take you ten (10) years or more to pay off your current debt you are likely a good candidate for bankruptcy. If you are having difficulty making this decision consult with an attorney so that you fully understand the benefits and consequence of bankruptcy. To schedule a one hour initial consultation with Kelsey & Trask P.C. call 508.655.5980.

What do "Debt Relief Agencies" really do?

It seems every time you turn on the radio, TV, or go online, you see stories of individuals in financial trouble, and plenty of businesses, agencies and organizations offering to help them out. Recently one particular "debt relief agency" has touted its "quick fix" services by encouraging consumers to stop paying their credit cards and not pay any "more money to those greedy banks". The service then promises to work with consumers to resolve their debt for "pennies on the dollar". So, do debt relief companies such as the one described deliver on their promises?

Most debt relief companies operate like so: You pay them a flat fee, usually calculated as a percentage of your total debt, and sign a power of attorney over to the debt agency allowing them to "negotiate with your creditors". You are then told to stop paying your credit cards. After you have stopped paying the minimum balances, credit card companies begin collection action against you, and may refer your case to a collection agency. Afterward, the "debt relief agency" will step in and make a lowball offer to the collection agency or creditor, which the credit card company may or may not accept.

Many consumers that have paid "debt relief agencies" thousands of dollars to assist them in resolving credit card debt, only find themselves in a far worse position: liens on property, wage garnishments, even foreclosure. The fact of the matter is that word is getting out about debt relief agencies, and more and more lenders are becoming unwilling to settle with the individual debtors, and rather seek resolution in court or through foreclosure. In most cases, the debt relief agencies are not licensed to practice law, so as soon as a debt collection lawsuit or foreclosure proceedings are commenced, the consumer is left alone, still in debt and hundreds or thousands of dollars out of pocket.

The success of any debt relief agency is completely dependent upon the creditor's willingness to settle the debt at a fraction of what is owed. There is no obligation of a creditor to accept a settlement offer or reduce your debt to any amount other than what is actually owed. Bankruptcy is different, and in a bankruptcy case the Bankruptcy Court is essentially ordering the discharge of certain debts and does not rely on a third party's ability to settle a case. However, only the United States Bankruptcy Court can compel the discharge of certain debts, and only if the laws and procedures for filing bankruptcy are followed. Bankruptcy is not the only option (or even the first or best option) to overcoming a financial problem, but it may play an important part in the debtor's strategy, and in certain circumstances, be the last and best option for a fresh start.





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