The Pitfalls of Debt Counseling, Workouts and Modifications
One purpose of changing the bankruptcy laws in 2005 was to prevent fraud and abuse of this important safety net. However, the new law spawned a cottage industry that preys on debtors through "alternative solutions" that often fail to reduce debts or save homes.
If you are facing foreclosure or buried in debt, there may be legitimate alternatives to bankruptcy. But there are also many companies that are either fraudulent or unable to deliver real relief. The law firm of David F. Cannon will help you explore bankruptcy as well as non-bankruptcy options, and help you steer clear of scams or programs that will probably make matters worse.
Beware the Debt Relief Traps in Tennessee
There are legitimate debt relief organizations, both nonprofit and for-profit, that do help people avoid foreclosure and climb out of debt. Unfortunately, many people give their money to fly-by-night outfits and poorly run programs and ultimately end up in bankruptcy anyway.
- Debt consolidation — A consolidated debt loan is the worst thing you can do. First, it creates a secured debt against your house to pay off unsecured debts. Second, it replaces your various debts with one giant monthly payment to worry about.
- Credit counseling and debt settlement — Some agencies pay themselves for many months before there is any benefit to the debtor. Some pay off one creditor at a time at the expense of others, which results in late fees and negative credit reports. Some promise to settle debts for "pennies on the dollar" but cannot deliver.
- Mortgage workouts — Your bank or the mortgage company may be willing to rework your loan to reduce the payments, lower the interest rate, extend the loan, etc. However, lenders are not legally obligated to help you. They will refinance only if it is in their interests to do so. Meanwhile, lenders will commonly continue with foreclosure proceedings while endlessly considering a workout request.
- Loan modifications — In the wake of the housing crisis, hundreds of save-your-home companies sprang up. Most of these outfits require steep, non-refundable upfront fees to "process" your application. Some loan modification companies are legitimately affiliated with federal mortgage modification programs and some are not. Either way, the approval rate is abysmal — less than 20 percent. The only guarantee is that they will keep your money.
Nashville Bankruptcy Lawyers Who Can Explain Your Options
Bankruptcy offers a guaranteed reprieve from creditor actions relief and actual relief from debts. However, you may not need such drastic relief or you may have good reasons to avoid bankruptcy. We have helped many clients address their debt or foreclosure problems through non-bankruptcy alternatives.
We urge you to consult an attorney first before wasting time and money on the wrong solution. Nashville lawyer David F. Cannon is certified as a Consumer Bankruptcy Specialist by The American Board of Certification and The Tennessee Commission on Continuing Legal Education and Specialization. He has handled Chapter 7, 13 and 11 bankruptcies for more than 20 years.
Call 615-800-3725, toll free at 877-696-8680, or e-mail our law office today to arrange a confidential consultation.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
