Debt Consolidation Companies Do Not Always Live up to What They Promise

Below is a recent experience that one of my clients had with a debt consolidation company.

Client felt overwhelmed.

A retired woman had been dealing with credit card debt for years and was over extended with debt. Her only source of income was social security. She had severe illnesses in the last 10-15 years, including a recent bout with cancer.

Client was approached by a company offering to consolidate her debts.

She enrolled in the program and stopped making her minimum payments on her accounts. She had approximately 6 credit card accounts with a total balance of about $30,000. She paid a deposit to the credit consolidation company. The company was going to contact all of her accounts and work out an affordable monthly payment. Client was later contacted by one of her credit accounts who had no record of the debt consolidation company contacting them. Client then attempted to contact the debt consolidation company and when she finally did reach them they offered no explanation of why they were not negotiating with all of her credit accounts. She attempted to cancel their services. The company refused to cancel the arrangement and would not return her deposit. They company even continued to attempt to withdraw funds from her bank account. She had to stop the ACH payments at her bank. Client’s credit score is now ruined because the credit consolidation company advised her to stop making payments on the account as they would handle the situation. She is now left with all the accounts calling her and no resolution.

Client consulted with the Law Offices of David A.

Arietta to figure out if bankruptcy would be a better option. She does not own any real estate and has limited assets. She is retired and on social security. The solution was to file for Chapter 7 bankruptcy relief. It was the perfect solution as it would give her a fresh start and not leave her family in debt. She would be debt free and could start to reestablish her credit over the next few years. If you have questions about whether bankruptcy is a better option over a debt consolidation plan – call David Arietta at (925) 472-8000.