Attorneys Posing as Debt Relief Companies
Many consumers looking for credit card debt help are being baited into filing bankruptcy by law firms posing as debt relief agencies. Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAP-CPA) of 2005, all law firms practicing bankruptcy law are considered debt relief agencies. Many of these firms have taken that distinction and twisted it to their advantage.
So how does the average consumer looking for credit card debt help distinguish between a bankruptcy firm and a debt settlement firm? The key is in the advertising. By observing the wording used in their advertisements, consumers can quickly distinguish the difference in debt relief firms.
One of the key phrases that both settlement and bankruptcy firms use is “Debt consolidation.” However, this phrase means something entirely different in each firm. For bankruptcy firms this is a term used for filing Chapter 13 reorganization bankruptcy. When you file Chapter 13 the court will designate a specific amount that you must pay the court each month so that they can pay your creditors. With a settlement company this term will refer to reducing your bills and paying them off with a single loan. Clarification of this term will help you avoid using the wrong company.
“Stop Garnishments” is another common term that will allow you to determine the debt relief is being offered through a bankruptcy firm and not a debt relief company. Garnishments can only be stopped through a court order.
“Wipe Out Debts Forever” refers to Chapter 7 bankruptcy which is total bankruptcy. Yes, all your debts are forgiven, but only after the court mandated sale of your possessions. This type of action will remain on your credit report for a decade.
People wishing to take control of their finances without using bankruptcy can do so with the help of credit counseling or possibly a debt settlement program. Do not be tricked into believing bankruptcy is your only option. Bankruptcy should be saved for people in so much financial distress, such as foreclosure, wage garnishment and loss of utilities; credit card debt issues can be resolved outside of the bankruptcy court.
