These businesses are also known as debt consolidation, debt negotiation, and debt elimination firms. The most common strategy employed by debt consolidation companies is advising consumers to allow their bills to default. The consumer is instructed to pay the debt settlement company instead of his or her creditors. The debt negotiation company typically retains 15 to 20 percent of the funds paid in. The debt settlement company then contacts the creditors and attempts to negotiate a reduced payment or settlement for a small portion of the total debt.
It may have been conceivable to construct such a house of cards in the past. However, creditors have become more shrewd and aggressive. If the creditor waits until the debt negotiator has settled with the other creditors, there may be a larger pool of available funds, and the debt settlement company may have to agree to a higher amount to get the final creditor to settle. Or the creditor might not resolve at all, causing the entire structure to collapse. At this point, the consumer has defaulted on all of their obligations, paid exorbitant fees to the debt elimination company, and remains deeply indebted. They are considering declaring bankruptcy after all.
In contrast, bankruptcy can serve as a dividing line in the desert. The consumer pays a fee to have their bankruptcy petition and schedules filed by a qualified bankruptcy attorney. All creditors are required by law to immediately cease all collection efforts, including phone calls, letters, and lawsuits. No further foreclosures will occur. The garnishes cease. The bankruptcy court judge determines which debts are dischargeable and which funds and assets the insolvent may retain. Once a judge issues a discharge order, the discharged debts are eliminated permanently.
Even though the bankruptcy has a substantial impact on a consumer's credit report, the impact is felt simultaneously. Within ten years, the bankruptcy judgment will be removed from the consumer's credit report. After approximately two years of timely bill payment, a consumer is typically eligible for credit on standard terms. In contrast, using debt consolidators and debt settlement companies may result in years of litigation and collection efforts.
According to the New York Times, there is no doubt about the value of these corporations' services. It is a terrible bargain for customers. Insolvency is a grave decision with enduring repercussions. However, it establishes a line in the sand from which a consumer can discharge most or all of their debts, start over from zero, and begin anew.""
" - https://www.affordablecebu.com/
