Reader mail: Recommendation for debt consolidation?

Hello, I’ve read through the various blogs about debt consolidation,etc, and I am just thoroughly confused. And not because I have a “low IQ.” At the end of all this, is there an entity you can recommend, or a resource for additional research? I’d like to find a solution (positive), but all I find are scams, lawsuits, and suffering (negative).

If there was a debt settlement / elimination / consolidation company I could recommend, you’d see a BIG ad for it on every page here and I’d make mega bucks from commissions.

Our Google ads are NOT endorsements as almost all credit-related ads are deceptive or outright fraud – PLEASE read our page on advertising.

You probably saw the Federal Debt Relief System fraud documentary and some of the many scams I’ve investigated. I don’t have time to write about EVERY scam I see and my clients have been scammed by all sorts of debt settlement companies.

Not all are total scams like FDRS, some DO settle debts or set up payment plans, but they do so without taking into consideration whether the consumer will be helped AND they are primarily concerned with their profits.

Why spend $10,000 to settle accounts if there is a $20k judgment with a vile outfit like Capital One that demands 80% of the CURRENT inflated balance (or three times the amount of the charge-off due to 28% interest) and you don’t have the extra $16K?

Most people only benefit if they can settle or consolidate ALL accounts.

Why enroll in a payment plan if you still owe almost as much after YEARS of payments as when you started?

See Credit counseling and the effect on your credit for details.

When you sign a contract with a debt consolidation company, the owner of the debt is NOT obligated to honor that contract. You may have legal claims against the debt consolidation company if they lied to you about a creditor accepting payments, but they might just file for bankruptcy or disappear as FDRS did.

Before deciding how to deal with your debt, you need to analyze your accounts, your finances, your credit and your desires and NEEDS.

Of course most people would agree to settle their debts for 10 cents on the dollar with affordable monthly payments and have the creditors delete the accounts from the credit reports. But that’s not going to happen unless you are very shrewd and prepared to fight in court.

If you seriously consider enrolling in ANY program, READ THE CONTRACT.

Read the FDRS damage reports and how most people thought that they really would settle their debts.

I read the FDRS contract and FDRS did NOT claim to settle debts at all.

Their ADVERTISEMENTS and their telephone sales pitch had NOTHING in common with their contract.

According to one FDRS victim, WorldNetDaily sent a PERSONAL letter to subscribers, highly recommending FDRS. It is a sign of the times that the organizations and people who CLAIM to be the “Free Press for a Free People” and “truthers” are either pure scum or incredibly stupid.

I have to mention “Info Warrior” Alex Jones.

He claims to fight corruption, but is so incredibly corrupt himself and sells out his fans to every scammer you can imagine. Alex Jones made some great documentaries — financed with the money made by ads for scammers who defrauded his listeners/readers.

George Noory on Coast to Coast.

Occasionally they have some really good guests, expose corruption and George Noory does a great job creating mainstream awareness of the dangers of GM food and additives and all sorts of interesting research.

Recently I’ve been hearing this commercial for another debt settlement scam, falsely claiming that you have the RIGHT to settle your debts for less than the full balance and insinuating that there is legislation providing you with a debt bailout. I don’t know whether Coast or KSFO (the radio station) airs the commercial, and it doesn’t really matter. The Coast listeners are deceived.

Since even the self proclaimed truthers couldn’t care less that their supporters are defrauded, you obviously can’t expect any diligence at financial or any other websites. They get big bucks for the ads and couldn’t possibly care less about YOU.

Debt settlement, consolidation and “elimination” is a HUGE and EXTREMELY profitable business.

The ad commissions are HUGE. FDRS paid a PERCENTAGE of the amount received from their victims. I checked out their affiliate program and I would have made a killing had I endorsed FDRS.

The criminals get away with bribing the FTC.

The regulators KNOW about these scams, but they rarely investigate and I’m not aware of anyone having been imprisoned. When the FTC actually pursues scammers, they usually sign consent agreements, refund part of the loot and write checks to the FTC for the cost of the investigation.

I’ve seen similar settlements in California for illegal lending practices. Usually, the scammers can CONTINUE to operate their businesses.

To all of you who are looking for HELP with your debt, this may NOT seem helpful.

I know that the reader is looking for “positive” solutions, but they do not exist and I don’t have a magic wand to create solutions.

You’re looking for HELP, not a lecture on how everything sucks. But I can’t recommend anyone because our capitalist system rewards the most ruthless liars and scammers and bankrupts HONEST and hard working people.

The American PEOPLE still SUPPORT the scammers and ADMIRE the wealthy and famous.

Most people  haven’t even figured out yet that it makes no difference which party they vote for — they’re all bought and paid for by the industry.

There won’t be any changes, forget about hope. You’ve been scammed.

Accept reality and evaluate your options.

Stop looking for miracles. If your debts are legitimate, assess you situation.

Do you qualify to discharge your debts through bankruptcy?

Many of my clients did NOT know that they qualified to discharge their debts. Most people CAN own a house, car, furniture and have retirement accounts such as IRAs and 401(k)s and discharge unsecured debts without losing any of their assets — rules depend on STATE law.

That doesn’t mean that you HAVE to file for bankruptcy, but it puts you in an excellent negotiating position. Contact all creditors and advise that you are considering filing for Ch. 7 bankruptcy, but that you would be able to settle (possibly borrow some money) if all creditors agree to whatever you can afford.

Sometimes it works, sometimes it doesn’t — it depends on the creditors.

AmEx has killed deals and chosen to be discharged and get nothing instead of accepting the settlement offer. But that might have changed too as bankruptcies are increasing.

If you are judgment-proof, you don’t have to do anything.

If your wages can’t be garnished and you don’t want to buy, sell or refinance real estate, invest in a new unlisted phone number, don’t keep any money in the bank under YOUR name and you can let the creditors do whatever they want.

That’s also a good option for FIGHTERS — people willing to pursue collectors for violations of the Fair Debt Collection Practices Act (FDCPA) and other consumer protection laws. I filed my share of lawsuits and got some settlements, but it is hard to make minimum wage unless you’re in a very debtor friendly court.

Do NOT take the advice provided at the free credit forums.

Some of my clients ended up in deep doodoo after sending out moronic disputes and cease and desist letters. Much of the free advice is provided by people who may mean well, but simply are not competent to give credit, collections and legal advice.

Few people understand how creditors and collectors decide what to do after receiving disputes and that they continually change their procedures. What worked for one person might not work for you.

I’ve been meaning to post about an excellent recent court ruling against collection attorneys. The plaintiff had sent the “cease and desist” demand to the original creditor. Since they could no longer contact him, they SUED him.

After 10 years of litigation AND settling the account with the original creditor, the consumer finally received an award of $1,000 from the collection attorneys.

Incredibly, the collection attorneys may have to pay $200,000 for the consumer’s attorneys’  fees AND of course they had their own litigation expenses.  According to the court filings, the collection lawyers REFUSED all attempts to settle this case.

NOBODY can predict what creditors / collectors will do.

Their strategies continually change and it’s a bit like playing chess. You can anticipate the opponents’ moves, but you can’t predict them with certainty.

The LAW is irrelevant UNLESS you are willing to sue.

And that goes both ways. Creditors have to sue you and prevail in court before they can garnish your wages or clean out your bank account. If you document collection and credit reporting violations, you can submit counter claims if they sue you even if you don’t want to file a lawsuit yourself.

Life is NOT simple.

If all this sounds too complicated and you decide to enroll in some debt consolidation program because it’s easier to write a check every month, at least read the contract and make sure you UNDERSTAND it BEFORE you sign. And accept that your credit will be destroyed and that you might get scammed.

I’ll be glad to have a look at debt settlement contracts and give you my opinion. Request that they email the contract to you (most companies will gladly do so) and you can forward it to me for review.

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