The ‘Debt Settlement Business’ is the latest and hottest ‘get rich scheme in America’.
Many people would rather try anything than file bankruptcy. Embarrassment. People can feel embarrassed when they file for bankruptcy and this embarrassment prevents them from exploring it as an option. The ads read, ‘Avoid Bankruptcy’ because it is portrayed as walking the gang plank. Everyone will sneaker at you. Laugh at you. You’ll be publically humiliated.
This is really not the case but people’s perceptions are very important and this perception is there. They believe in their subconscious that if they file for bankruptcy, they will be confronted by a masked and cloaked man who will approach them while they are on the witness stand and flinging his cape over his shoulder, and pointing directly into their face, will scream, ‘You filed for bankruptcy and you are bankrupt. How pathetic!’. And you will want to crawl under a rug.
Nothing could be further from reality but people have visions or nightmares of the above and this makes them want to avoid bankruptcy and avoid even the discussion and comparison of it to other options. And consequently, they see an ad on television and dial the toll-free number and they are on their way to conning themselves. The slick telemarketer has his/her script and follows through in the days after you have contacted them and there’s a good chance that you will go with them. It’s a numbers game. They know that out of 20 calls, they’ll land at least 5 fish.
Embarrassment is really the first approach to financial problems which is to ‘ignore the problem’ and put your head in the sand.
Also, people fear bankruptcy. They think that they are going to lose their home. They think that they will never be able to buy a home if they file for bankruptcy. They are in denial and they just can’t believe any professional who tells them that most of time by filing bankruptcy, it will speed up their opportunities to buying a home and/or restoring their credit score.
And I’m always amazed at the number of people who are afraid that if they don’t pay their debts that they will go to jail. Nothing could be further from the truth. Debtor’s Prison was abolished approximately 200 years ago. Further, if people went to jail for not paying their debts in the United States, more people would be in prison than would be outside of prison.
I had one young lady contact me via Email and asked me questions about her options. After several Emails, she wrote, ‘Ok, I’m ready to accept the fact that I’m a failure. I’ll make an appointment’. I immediately wrote back to her and said, ‘Yes, you are having financial problems. But the fact that you are having financial problems doesn’t make you a failure.’ I referred her to my website, http://www.grotonbankruptcy.com and referred her to the self-correcting quiz entitled, ‘Famous People’. More specially, I referred to the little biographical sketches on Walt Disney who filed once, Henry Ford whose company Ford Motors filed twice and Milton Hershey, who filed 3 times.
At one time, no one mentioned the fact that someone died from cancer. It was a mark of shame on the family. We still have to make progress in their area of personal finances because filing for bankruptcy is equated with being ‘marked’ or ‘branded’ as a failure. Yes, your fiances can be out of control and yes, you could have been careless in handling your finances, or you just had a run of bad fortune like Job in the Old Testament, but that doesn’t mean you are a failure. But the scammers and con artist prey on their psychological weakness people have and the harsh judgments they rendered against themselves. You have to ‘forgive your trespasses and forgive those you trespass against you’ .
I have had people come to my office and tell me that the filing of bankruptcy is against God’s word. It’s sinful.
I have referred these people to Deuteronomy 15:1-2.
At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD’s release. Deut 15:1,2.
In the book of Leviticus Moses announces God’s decree that special years be set aside for the forgiveness of debt, freeing of slaves, and other measures re-balancing the social order. It was never God’s intention to create a society where debt was a crime. We see a society where loans were kept to a minimum by law, and gratuity and charity, were kept to a maximum by law. To accomplish this end, God did not outlaw borrowing and lending, but instead He provided that loans would eventually become gifts, and thereby limited loans only to those in need. He permitted the loan to take place, and the obligation to repay to occur, but He limited the legal obligation to repay to a maximum of only seven years. Every seventh year all lenders were to release their debtors from all of their debts. Every seventh year, the debtors were discharged from all their loans and were no longer legally obligated to repay them. The debtor was free of all loans by force of law.
Paying your debts is a matter of honor and respect for oneself. And people can be knocked-out and not know it. Their mind is unconscious. Their body wants to keep on fighting and never stop fighting. Fighting for self-respect, dignity and honor. But it takes an independent and professional referee to declare the fight ‘over’.
They simply front load all their fees at the beginning of a debt settlement plan. Let’s say that you have $15,000 work of credit card debt. Here’s the breakdown:
| Debt Negotiation Fee | = | $2,250.00 |
| Debt Settlement | = | $7,500.00 |
| Total Payment | = | $9,750.00 over 36 months |
| = | $270.83 per month. |
Now here’s how they make their money. They take their fee of $2,250.00 from all the initial payments you make of $270.83 per month. Therefore, for the first 8 months, all the payments of $270.83 goes to the debt settlement company as their non-refundable negotiation fees. Your first 8 months of payments all go to the company itself and nothing is paid to creditors.
And here’s the next piece of vital information, only 5 cases in a 100 complete their Debt Settlement Plan. Most people drop out of the Debt Settlement Plan after less than one year. So for one year, all you did was pay a debt settlement company their fees!! Therefore, all your payments represent pure income to them.
Who are the debt settlement companies? They are all out-of-state. There’s no one that has a local office. They are located primarily in California, Texas and Florida. You can only reach them by phone or the Internet.
There is not one debt settlement company who is licensed and bonded by the Connecticut Department of Banking as a Debt Adjuster!!!!!!!
You can guard against the scams by asking questions as follows:
You should know that Attorneys are licensed to practice law by the Judicial Department for the State of Connecticut. Attorneys are not licensed and bonded by the Department of Banking but rather come under the jurisdiction of the Connecticut Judicial Department. Attorneys can represent clients in debt management or debt settlement. Again, call the Conn Banking Department at (800) 831-7225 or (860) 240-8299 in order to verify this information.
I have found that once someone gets a bad report from the Better Business Bureau, the slick scam artists have a foolproof way around a bad reputation. They simply open an another business under new business name, and viola, they have a clean slate. And as soon as the complaints come in against the new business, they simply repeat the cycle and open another new company. They only have Post Office Box addresses and you only reach them by telephone. Many times when you trace where they really exist, you find that they have a Post Office box in one state, and the answering machine in that state which forwards calls to another state. This is a real sign that you are dealing with a scam artist. Also, they have several companies with names which are very similar. One company will be the servicing company and another company will be the marketing company, and so on. They create shell business to make it extremely confusing to find them and to know who are really dealing with.
REMEMBER TO ASK YOURSELF: Do they have a physical office I can visit? Where exactly is it? AND FINALLY, if you are going to have a 3-5 relationship with a business, you owe it to yourself to visit that office.