Alternatives to Bankruptcy
Out of court settlements are one of the few truly viable alternatives to bankruptcy. Such settlements are generally private contracts between the debtor and creditors. In exchange for a certain amount paid by debtor, creditor will discharge the remaining liability. When settlement works it works. The problem is all too often settlement does not work.What debt settlement companies do not tell consumers is what is in the fine print. The fine print can include withholding payment by the debt settlement company until the creditor agrees, which can take months if at all. In the meantime creditors are free to continue their collection methods including but not limited to: harassing phone calls, dunning letters and lawsuits aimed at obtaining judgment.
The problem has gotten so bad that a recent article in the Wall Street Journal, found here: http://online.wsj.com/article/SB125763415390436265.html?mod=WSJ_hpp_sections_personalfinance
details the troubles with the debt settlement industry. The article basically paints a picture of the wild west where unscrupulous debt settlement companies promise the moon but in actuality have less than a 10 percent success rate.
As a result, the Federal Trade Commission, States Attorney Generals and Congress have taken up the issue. Your best bet to protect yourself is to know all your options. The following websites can offer some guidance: National Foundation for Credit Counseling (www.nfcc.org); Bolinske & Bolinske (www.bolinskebankruptcylaw.com); and Credit.com (www.credit.com).
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