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Five Reasons Why Debt Consultants Are A Bad Bankruptcy Alternative


Credit and debt consultants advertise that they can settle your debts for cents on the dollar. It sounds too good to be true, and usually it is. They put you on a monthly plan where you pay hundreds of dollars per month, and they tell you they will use that money to make a debt settlement with your creditors. In many cases a debt settlement or debt management plan is a scam. It sounds good, but here are five reasons why using a debt consultant to deal with your debts is not a good idea:

First, a debt consultant doesn’t work for free. They will take the first few monthly payments you make for their fee. If they take the first 10 monthly payments for their fee, and then take another 10 payments for the settlement offer to the one of your credit cards, it will be 20 months before the first credit card company gets any money. It is not likely that a credit card company will do nothing for 20 months when they are not getting paid. If they are not getting paid, they will continue to call you, and they may take you to court and sue you. That’s not good for you.

Second, debt settlements will not work on all types of debts. The government will not accept a deal to get rid of your tax debt. They want their money, and they don’t make deals, because if they make a deal with you, they will need to make a deal with everybody, and that’s a bad precedent for them to set.

Third, the debt consultant has no way to force all of your creditors to accept the deal. One or two of your credit card companies may agree to a deal, but if the others don’t agree and sue you, the deal will fall apart. You need relief for all of your debts, not just some of them.

Fourth, in many cases the debt consultant is not doing anything that you couldn’t do on your own. Putting money in a bank account for two years, and then sending it to the credit card company, does not take much skill. You can do that on your own.

Fifth, many debt consultants will meet with you, review your situation, charge you a fee, and then refer you to an American bankruptcy attorney, or a Canadian bankruptcy trustee or consumer proposal administrator! They don’t actually do anything for you, other than tell you that you need professional assistance. Start with the professional; don’t pay the consultant first.

You have options, including a debt consolidation loan, a Chapter 13 Wage Earner Plan, and a consumer proposal. You can even file bankruptcy in Canada, or Chapter 7 Bankruptcy in the USA. Consult an expert today and review your options.

Posted by Editor Bankruptcy Alternatives @ 6:23 pm

How will new bankruptcy rules in Canada affect me?


Much has been written about the new bankruptcy rules in the United States that came into force in 2005. Less well known is the fact that new bankruptcy rules in Canada came into force in September, 2009. One of the impacts of the new rules in both Canada and the United States is that personal bankruptcy will cost more for many individuals.

In Canada, the new surplus income rules mean that if you earn over a set amount, you will be paying more while bankrupt, and your bankruptcy will last longer.

If you have good income, but also have high debts, it is important that you explore all bankruptcy alternatives to avoid paying a huge amount while bankrupt.

The two obvious alternatives to bankruptcy are a Chapter 13 Wage Earner Plan (if you live in the United States), or a consumer proposal (if you live in Canada).

There are pros and cons to both options, but in general it’s a good idea to avoid bankruptcy if possible. Consult an expert in the United States or Canada for more information.

Posted by Editor Bankruptcy Alternatives @ 6:28 pm is a free resource
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