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Broke in Atlanta The Truth About Debt Settlement Companies Atlanta, GA

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Broke in Atlanta — The Truth About Debt Settlement Companies

The long term effects of the Great Recession are still being felt in Georgia, where the jobless rate reached 10.3 percent last month. To get by, many Georgians have relied on credit cards to tide themselves through the economic slump – although few expected the downturn to last as long as it has.

Now, many families are finding themselves deeper in debt than they ever dreamed possible. Homeowners have watched the equity in their homes disappear and their home values slip underwater.

A mass of debt settlement companies have emerged from this mess, flooding the airwaves with promises of an easy resolution. But, the truth about debt settlement companies is not as great as it may seem. A deeper exploration into the operation of debt settlement companies reveals a number of problems for individuals and reasons why families struggling to get by should contact an Atlanta bankruptcy lawyer to discuss their options.

Too Good to Be True?

Debt settlement companies are enticing individuals with claims that the company can negotiate with creditors, reducing the amount of money by 30-70 percent with only a modest or no impact to the person’s credit. Some even claim that negative credit information can be removed from a credit report when their program has been completed.

Debt settlement companies operate by having people send money to the company rather than their creditors. This money is supposedly held in an account which will be distributed to the creditors once the settlement has been complete.

If it sounds too good to be true, that’s because it probably is. According to the Federal Trade Commission, debt settlement companies frequently make a series of promises they cannot keep.

Debt settlement sounds like a solution, but the reality can be very different. Many unhappy debtors discover debt settlement does not always bring them closer to resolution.

The truth is this – debt settlement companies have no more power to get creditors to negotiate than an individual does. There are no federal laws which compel creditors to negotiate or accept partial payment of a debt.

Creditors do, however, have to report missed payments or late payments. While a person is making payments to a debt settlement company, the creditors will not be paid, and interest will be added to the balance that is owed.

Even worse, creditors can take legal action during this time. Debt settlement companies do not provide any protection from creditors who choose to sue. Once a judgment has been obtained, a creditor may try to garnish bank accounts or wages to recover the money that is owed to them.

Even if a debt settlement company is able to negotiate a deal, there may be tax consequences for the debt that is not repaid. Debt that is forgiven by a creditor is considered income in most cases. People are frequently shocked when they get taxed on money that they thought they did not owe. This can lead to taxes and penalties owed to the IRS, which can put families back in the red again.

Finally, there are fees associated with a debt settlement company that are often expensive in and of themselves. While the settlement company cannot legally charge a fee before they have settled or negotiated a person’s debt, they can charge a monthly maintenance fee.

Advantages of Bankruptcy

People are often reticent to consider bankruptcy because they are confused by some of the common myths about bankruptcy. A frequent fear of potential filers is that they will be forced to give up everything when they file bankruptcy. This is simply not true. The bankruptcy laws were designed to give individuals a fresh start. There are specific exemptions available to protect individual assets. A lawyer will explain which assets can be protected when they meet with a potential client.

Another common misconception about bankruptcy is that it will prevent an individual from ever obtaining credit again. People are able to work on re-establishing their credit as soon as their bankruptcy is finished because their debts are discharged or wiped out.

For many, bankruptcy can be a faster way to re-establish their credit than using a debt settlement company. Bankruptcy gives people the opportunity to start over right away, where debt settlement agreements typically take years, severely damaging a person’s credit throughout that time.

It is also unfortunately true that most people will be unable to keep up with their debt settlement payments. An unplanned for emergency can leave many people worse off than when they started.

Bankruptcy is of the greatest relief to people who are losing sleep because of the stress caused by continual collection calls from creditors. Bankruptcy has the power to stop collection calls for good.

As soon as a person’s bankruptcy case is filed, the individual is protected from creditors by an automatic stay. The automatic stay operates as a shield from creditors. Creditors must suspend all collection activities at that time.

This means that creditors not only have to stop calling the debtor, but if they are garnishing wages or in the midst of suing them, they must stop those proceedings as well. Wage garnishments will stop.

The automatic stay will even help people fighting to stop foreclosures of their homes. There are several options for dealing with overdue mortgages with bankruptcy. The appropriate solution will be different for each individual or family.

If you or a family member is tired of struggling with your debt and is looking for a solution, you should call an experienced Atlanta bankruptcy attorney who can examine your case and review the choices available to you.

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Our Client Reviews

Gingold & Gingold LLC
5.0 / 5.0

Based on 28 reviews

Jack L.

They did an excellent job with my case. Jamie took the time to really listen and understand things. She delved into the details and was extremely knowledgeable and non judgmental. Very professional and they know what they are doing. Would definitely recommend!

All C.

Mr. Gingold was recommended by an attorney I had worked with previously. I met with Ira Gingold to discuss credit issues. He went over each specific issue thoroughly. He advised me of the potential outcomes. He did all this in one meeting for a very reasonable price. When we finished I was confident in moving forward with a resolution. He definitely wants to help people take the appropriate course of action for their circumstance.

Karen B.

Dear Mr Gingold, There are so many reasons to be thankful for all you have done and will do. Anyone who has ever had unfavorable experiences with an attorney or the legal system will feel the trepidation that I experienced once I realized that my situation seemed hopeless. It was by chance and happily good luck that I decided to put my future and sanity into your hands. I was mortified at having to deal with my debts by claiming bankruptcy. I remember in our first meeting how you assured me that I was not alone and should not feel ashamed. And, anyone in this position obviously does not have money to spare and you were clear about all the costs and allowing me to pay according to my own ability to do so. You advised me in all aspects of the law, but also, you were at each meeting incredibly supportive and complementary of my personal and professional plans. Anyone else in this situation should feel blessed to have access to your expertise and support.

Lyla B.

I thought the process of filing bankruptcy was going to be a difficult one. However, Gingold & Gingold treated me with respect and dignity from the moment I walked through their door. I had the pleasure of working with Jamie. She is very responsive, professional, and knowledgeable. She took the time and listened to my every concern and handled each and every one of them to my satisfaction. My experience with filing bankruptcy under Gingold & Gingold's representation exceeded my expectations in a major way. They gave me such a peace of mind. I am very pleased with my decision of going with Gingold & Gingold to represent me when I filed Chapter 13 bankruptcy.

Julie T.

Wow! I am finally out of debt and can say that I am debt free after completing my chapter 7 bankruptcy case with Gingold and Gingold. Mr dangled was very knowledgeable and direct with regard to my debt situation. there were no surprises and the case went as I was advised. The staff was also very helpful whenever I had a question. I will definitely recommend them in the future to my friends.

Sherard W.

I cannot say enough about this law firm. From the initial consultation to our discharge, the entire office kept me updated with every step of the entire process. I came to the Gingold after a bad experience with another law firm. Ira and Jamie immediately began treating me like family through this experience. In the end, they assisted with eliminating many debts including my 2nd mortgage. I cannot say enough about the experience and knowledge that Ira brought to the table from the office visits to the court time. Thank you very much for helping me through this tough time. Thank you.

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