There’s almost nothing you can say good about bill consolidation schemes. It is amazing that people fall for Bill consolidation scams all the time. The only reliable Bill consolidation proven to work is Chapter 13 debt repayment, and even Chapter 13 doesn’t work all the time, because it takes years to repay debt, and people lose their jobs or get sick forever, have reduction in income, or some other disaster when they been paying for two years, can’t pay anymore, and they can’t continue.
The magic of Chapter 13 is that it handles all of your debt, in most cases. The real secret sauce is you pay your secured debt like vehicles and mortgages first, before unsecured creditors such as medical bills and credit cards get anything.
The unsecured creditors have to wait until your secured creditors are paid, and your attorneys fees are paid, before they get any money. The secret, secret sauce in chapter 13 is in many cases, you don’t have to pay your unsecured creditors in full, and there’s not much they can do about it.
For instance, many cases we can pay a vehicle in full, and then take $30,000 in credit cards and medical bills, and pay them only $3000. That’s $0.10 on the dollar, that’s $27,000 in debt forgiveness. There is no bill consolidation or debt settlement scheme that can do that, and there are several reasons why.
If you have more than two or three creditors, bill consolidation or debt settlement doesn’t work because it’s hard to get them all to cooperate. If one doesn’t cooperate, they can take collection action and garnish you, while you’re paying the other two.
The only time bill consolidation or debt settlement works well is if you only have one creditor, or one lawsuit, and you can call them up and make a deal yourself. In the case of a single lawsuit, if that’s your only problem, you can also ask the judge for a stay of execution if you don’t have any other defense, and a payment plan. So if it’s just one debt, and the debt isn’t too big, consolidate or settle it yourself.
Many of these bill consolidation or debt settlement schemes have been sued by consumer protection Bureau’s, but they keep on popping up like cockroaches, some of them under different names. They are not licensed attorneys and have nothing to lose by defrauding you.
Without the power of the bankruptcy court prohibition on any collection action, you are at the mercy of the creditors. You can’t force a plan on them, you can’t force a plan that’s within your budget, and I can’t say enough bad things about bill consolidation or debt settlement outfits, because we see too many people that usually waste $2000 to $5000 before they realize it’s disgusting and a fraud, and it’s pretty hard to get your money back from some boiler room outfit in Las Vegas.
If you are thinking about trying to avoid bankruptcy, take my free 20 minute credit counseling course or my two-hour debtor education course, cut your budget to the bone, never eat out again, and don’t spend a spare nickel; give it all to your creditors until you’re done with them. But don’t give it to a debt consolidation outfit. And don’t believe the reviews, most of them are phony.
There’s a lot on information on the internet that criticizes debt settlement, mortgage settlement, student loan settlement, and all that kind of thing, no reliable information that says it’s anything but bad.