Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

Debt relief ads seem to be everywhere: on television, on the radio, and in newspapers and magazines.  These companies use different terms to describe their services like counseling, consolidation, negotiation, mediation, settlement, reduction, relief, elimination, and so many others.  They all make promises – some more bold than others.  A few of these companies are legitimate.  I want to discuss the majority of these companies that are not legitimate and how to identify debt relief scams.

There are several simple warning signs to identify debt relief scams.  One warning sign is when the company requires a large up-front fee.  The company may even disguise that fee by calling it a “first payment.” Many consumers are surprised when that “first payment” is paid to the debt company and not paid to creditors.  That can also result in a thirty day delinquency on a credit report – just the kind of damage the consumer was trying to avoid!

Another warning sign is if the company makes promises that your credit score will not be affected by their program.  The truth is that there is not a legitimate debt relief program available that can guarantee that your credit report will not be adversely affected.  Any time a debt is not paid according to the terms of the original contract, the creditor is entitled to report adversely.  The creditor may fail to report, or may agree to not report at all, but there is no way to prevent a creditor from reporting truthful information to a credit bureau.

Finally, if the company claims that it can protect you from lawsuits or creditor harassment, run away!  The Fair Debt Collections Practices Act (FDCPA) provides that third party collectors (e.g. collection agencies) cannot contact a debtor directly once an attorney is representing the debtor.  However, the FDCPA does not apply to original creditors (e.g. a credit card company), and it does not apply to non-attorney debt relief companies.  If your creditor wants to sue you over a delinquent debt, only a bankruptcy filing can prevent it.  Additionally, the debt relief company cannot represent you in court – only a licensed attorney can do that!

You can protect yourself from these scams by consulting an attorney.  Only an attorney can explain your legal rights and help you choose the best course of action to resolve your debt problems.  For more information on how to protect yourself contact Fears | Nachawati toll free at 1.866.705-7584 or by e-mailing info@fnlawfirm.com. 

While it is true that bankruptcy can be a good option to remove bad debts or save your home, it should not be entered into lightly. Following are the pros and cons when deciding to file for bankruptcy:

• Filing bankruptcy means that your bankruptcy is listed on your credit report and remains there for 10 years on a chapter 7 and usually 7 years on a chapter 13. However, this does not mean that you have to wait to 7-10 years to get good credit again. Many bankruptcy clients have been able to get a mortgage from a bank to purchase a house about 2 years after the bankruptcy.

·         Another downside of filing bankruptcy is the cost involved. While bankruptcy does cost money, it can also save you thousands or even your home once debts are discharged or repayment plans proposed through bankruptcy. The fees paid to the court and a bankruptcy attorney are much less significant than if you had to pay your creditors or lose your home.

Each financial situation is different. Consult a competent bankruptcy attorney who represents debtors to find out what is in your best interest. For a free bankruptcy consultation contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at info@fnlawfirm.com. 

Yes, payday loans are considered creditors that can be added to a Chapter 7 bankruptcy petition. They will be discharged along with all your other debts.

Unfortunately, many people are not aware of this and do not include the payday loans in their petition due to intimidation tactics used by payday loan companies. Some of the tactics these companies use start way before a bankruptcy is anticipated. They will add a clause in the contract you originally signed that prohibits you from including them in a bankruptcy. But be assured that you are able to put your payday loan on a bankruptcy and that this is a clause that cannot actually be enforced by a payday loan company. Payday loan companies put that clause in a contract because they are insistent that you pay back the loan plus the exuberant interest rate they charge. This is how they make their money.

Make sure you consult with an experienced, highly skilled bankruptcy attorney regarding payday loan issues in your bankruptcy. For a free consultation, contact Dallas bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or info@fnlawfirm.com.