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Can debt relief help me?

On Behalf of | Dec 4, 2020 | What Bankruptcy Can Do |

When faced with mounting bills, it is easy for a person’s financial situation to get out of control quickly. When this occurs, your first impulse may be to sign up with a debt relief program. After all, these programs make impressive claims about reducing or even eliminating your debt. As promising as that seems, many people have a vastly different experience. 

As explained by Forbes, debt relief is not all that it is made out to be. The following are a few cons associated with these programs, which might ultimately make your financial situation even more unmanageable than it already is. 

You will have no guarantee

Despite all the claims made by debt relief companies, they cannot guarantee any results. In some cases, creditors may reject their offers and leave you with the full amount of debt. Additionally, you will incur even more debt if cease making payments to creditors, which many debt relief companies request. That means you will be on the hook for late fees and penalties, while also having to deal with constant creditor contact. 

You will be required to pay fees

Most debt relief companies charge fees for their services. While there are rules and regulations regarding the types of fees you can be charged, not all companies are beholden to these rules. That means you could be subject to hidden charges you are not even aware of. In the very least, you will be required to pay a fee to the company, which can be up to 20% of your debt. 

You may still be subject to a lawsuit

When you begin the bankruptcy process you are afforded an automatic stay, which means creditors cannot contact you to recoup their money or take legal action against you until the bankruptcy case is decided. There is no automatic stay associated with debt relief. Creditors can still file suit against you, which will only add to your costs.