Debt on Americans – Debt settlement as an alternative to Bankruptcy!
Americans owe over $2.56 Trillion in credit card and other consumer debt. The new credit card Reform laws that were supposed to mitigate the damage caused by such an overwhelming debt load have unfortunately led to an increase in interest rates combined with higher payments. Naturally, this has forced the average American consumer into a deeper financial hole.
Due to the economic crisis several Debt Settlement companies emerged promising almost instant relief from overbearing creditors. These Debt Settlement companies all operate under a similar program.
- They tell you to stop making payments on your credit cards and to instead place that money into an escrow account.
- They then put you on a payment plan for 3 to 4 years.
- A large percentage of the money you pay into that account for the first 12 -24 months goes to paying the company fees.
- Many similar companies admit that most of their clients do not complete the program.
Under such conditions, the client cannot even begin negotiating until they have accrued a set amount of money from each of your accounts, if you have several accounts some creditors won’t be able to get a settlement offer for several years. In effect, this ensures that most of your money ends up going to commissions with the debt settlement company.
Unless your debt situation happens to fall into all sorts of favorable criteria (criteria determined by the debt settlement company) you as the consumer will inevitably be transfering your debt from your current creditors to a new creditor (the debt settlement company) under terms that are marginably better, if not worse than your current situation.
Why are we different from debt relief comapanies?
First of all, we are a law firm not an attorney backed company. We take a legal approach to debt settlement. Just like settlements in a lawsuit, we settle the account through active negotiations. We couple our demands with points of law. Second, we do not deal with debt consolidation.
As a consumer and debtor, you should know that under the Fair Debt Collection Practices, “no debt collector shall collect or attempt to collect a consumer debt by means of the following practice”. While under California Civil Code 1788.14(C) –
initiating communications, other than statements of account, with the debtor with regard to the consumer debt, when the debt collector has been previously notified in writing by the debtor’s attorney that the debtor is represented by such attorney with respect to the consumer debt and such notice includes the attorney that all communications regarding the consumer debt be addressed to such attorney, unless the attorney fails to answer correspondence return telephone calls, or discuss the obligation in question
Shah Peerally, as an attorney, operates much differently than a standard debt settlement company. We don’t believe in conventional debt settlement, like 3 to 4 years plan, nor escrow accounts. Our approach to settlement, when our clients retain us as legal Counsel is to commence negotiating with their creditors from day one. During negotiation process we look for creditors in violation of privacy, debt collection practices and credit reporting laws. These laws make creditors possibly liable for a fine up to $1000. In addition, sometimes attorney fees can also be recovered in such violations. This gives us huge leverage in negotiating a settlement for our client and enables us to oftentimes settle accounts for as low as 40%.
There is no waiting time for us to start negotiations because we do not have an escrow system set up. After negotiations, if we come to an agreement with the creditor, we settle for this amount either in a lump sum or into several payments possibly not exceeding six months plan. Such settlements usually do not carry any interest or penalty. The amount is decided once a settlement is reached.
Note that the settlements are contracts that need to be paid on the assumed dates. Failure to pay will result in a breach of contract. Also note that there might be tax and credit score repercussions on. You might want to check with a tax attorney or a CPA to help.
For more information about debt settlement call our office on 510 742 5887. Our law firm handles debt settlement all over California. If you live in California and you are affected by the downturn in the economy called lawyer Shah Peerally to help.
