Debt Consolidation

Non-Profit Debt Consolidation

There are tons of non-profit debt consolidators in the Murrieta and Temecula areas.   In general what they do is, set you up with a debt consolidation plan.  One place put it this way, “You will be able to combine most, if not all of your unsecured debt and make one single monthly payment.” Your accounts don’t vanish, you haven’t done a consolidation loan, but instead the debt consolidators pay your various accounts monthly as you pay the debt consolidation company.   They claim that you will become more organized and eventually learn to understand your finances better through participation in the program.  Finally they stated that debt consolidation “may reduce” your payments. 

You may have heard that “those who can’t, teach.” Well, if someone wants to teach you about your debts, ask yourself how much they can do about it? (As an aside, most of the teachers I know are quite able and deserve more than they’re getting right now, but these debt consolidators are often not even college grads.)

Hmmm, “May Reduce”?  Wait a minute, isn’t that why you are thinking about contacting these people in the first place, because you don’t have the income currently to meet all the financial obligations that you have right now?  I doubt that’s the deal your looking for. I expect you’re looking for a will-reduce-your-payments type of plan.  Certainly there are a few of you who can afford all of your debts and are just looking for a way to get organized and if that’s the case, maybe a debt consolidation company is right for you.  But if you’re like most people who are looking into this you’re probably looking to make a bit more progress than that.

What most of these companies will tell you that they do is that they contact your credit card companies and medical bills and what not, and they negotiate a payment for you.  Either they are going to try to reduce the principal, interest, extend the term of the contract or a combination of them. 

But what they do not tell you is that, if they’ve been doing this for a while, they already know which of your credit cards are going to play ball with them and which will not.  How could they not know?  Think about it.  However, they will never tell you that you have a  card or account that won’t want to participate. 

So, they set you up with a debt consolidation payment plan and never tell you that one of your accounts didn’t like the terms and decided not to participate.  Instead, after getting a reduced payment or even no payment at all, 6 months or 10 months later, that card sues you.  You call up and exclaim, Wells The Fargo!  Why am I being sued? And the debt consolidators tell you, “oh goodness, it appears that they’ve decided not to participate.”  At that point you’re going to have to file bankruptcy before you have your wages garnished or a bank levy hits your checking and savings accounts. 

And why does that sweet little old non-profit debt consolidation company do that to you?  For the money!  Yes, fans that’s right, for the money.  Just because they’re not for profit does not mean that the officers of the company don’t take a huge salary.  It just means that they cannot declare a dividend to share holders.  So, what difference does it make?  Answer: You’re paying bankruptcy prices to non-lawyers for a non-legal service without the great results you’d get if you simply filed a bankruptcy instead.

So wait a minute, you’re only paying them $20/mo and about $300 down to set it up, right? (low end some charge you thousands)  That’s a lot of months that they’ve set up your payment plan for.  How much did they tell you?  48 months?  36 months?  36 x 20 = $720 and if they have 500 of you making payments through this type of plan that’s $10,000/mo plus $150,000 in set up fees. And as one debt consolidator put it, “I keep the float.” Meaning every month he’s got tens of thousands in his accounts collecting interest from his bank and he absorbs that interest for himself.  And for all that they “may reduce” your payments which means that one of the credit cards may not participate and will sue you.  Maybe not but good luck getting a guarantee out of them.

Chapter 13 Bankruptcy

Do you know what one is?  It’s a debt consolidation plan with the Federal Bankruptcy Code behind it backing you up and forcing your creditors to listen up and back down.  Creditors must take the plan.  I love it, we reduce interest rates on creditors to 0% and often reduce principals down to 5% or 10% of the total balances. 

Try as you might, you could pay off all your debts if only you didn’t have those pesky 20% to 29% interest rates.  With interest rates like that it will take decades to pay off your debt if you paid only the minimum payments.  They will just never let you pay down the principal. And it will be literally decades.

What if you owed say $60,000 in credit cards, medical bills, a repossessed car, and a student loan?  That would cost you $1000/mo . . . if you didn’t have to pay all that interest.  But with all the interest, late fees and penalties, you’re looking at monthly payments of $1500 to $2000/mo.  Maybe more.  Without the interest, penalties and late fees aren’t things tough enough already in Murrieta or Temecula?

A Chapter 13 bankruptcy gives you leverage that the debt consolidators only wish for.  You can force the credit cards, student loans and medical bills to take 0%.  If that’s all you can afford, then 0% interest.  If you can afford only $500/mo, guess what, then they get only about 50% of the principal. 

And none of them can sue you either, and if they want to opt out and not participate, they can, but what they’ll get is 1) they can’t sue you and 2) they get paid nothing at all.  Call me for more information on how to you might qualify for this type of bankruptcy debt consolidation.

Oh, and let’s keep it real, yes I do it for the money, but I’m also an attorney with years of experience offering a real solution to a very real problem. Not a way to “learn about” or “understand” your debts.  Let’s do something about it.  Call now 951-200-3613.

About David Nelson

I love to get people out of trouble and out of debt. In Temecula and Murrieta Call 951-200-3613 for a consultation. Connect with me on Google Plus. Bankruptcy Attorney David Nelson on Google+
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