Kentucky Bankruptcy Law

Counsel with Care

Be cautious of debt solution centers

I just saw an advertisement for a debt solutions center that promises to settle your debts for pennies on the dollar. Many of these agencies are pure hogwash! What they do is have you pay in hundreds of dollars a month, charge huge fees, and then occasionally get a creditor to accept a lump some payment for less than you owe – usually for sixty pennies or more on the dollar (rather than just a few pennies). All too often, your money just disappears into a black hole and your debt situation ends up worse rather than better. Even when you do get a debt forgiven for less than what you owe, you get a nice surprise in January of the next year. Any debt forgiveness over $600.00 gets reported by the creditor as income to you. You have to pay taxes on forgiven debt and chances are money is still really tight for you and you don’t have the cash to cover the extra taxes.

So, you have paid huge fees to convert dischargeable credit card debt into non-dischargeable tax debt.

There are legitimate debt help agencies. One that I have had some experience with and feel good about is Apprisen Consumer Credit Counseling Service that I have mentioned before. They will sit down with you and tell you what relief you can expect and what your monthly fee would be and where it would go. The fees are distributed to creditors monthly. If, instead, the agency wants to just collect a large pool of cash with the notion that they may work out a lump sum payout, run away – run far, far away.

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January 23, 2010 - Posted by | Bankruptcy, Debt solution centers | , , ,

4 Comments »

  1. […] by elusivejustice on January 23, 2010 Check out this post at Kentucky Bankruptcy Law to avoid being ripped […]

    Pingback by Need debt relief? Beware of advertised debt solution centers « Elusive Justice | January 23, 2010 | Reply

  2. […] tough economic times. Before going to one, be sure to read this <a href="Check out this post at Kentucky Bankruptcy Law to avoid being ripped off.”>post at Kentucky Bankruptcy Law. […]

    Pingback by Don’t get ripped off by “debt solution centers” « Bluegrass Business Law | January 23, 2010 | Reply

  3. Great advice. While there are a few, out of the masses, of “debt solution” companies, one would likely be better off utilizing a non-profit organization to help with managing their debt and for learning what options they may have.

    Comment by William Witman | February 6, 2010 | Reply

  4. good blog, a lot of good information.

    Comment by Kevin | July 9, 2010 | Reply


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