Many clients who come to me arrive after having attempted to complete a debt management program or debt consolidation. While I applaud their efforts, the majority of those people have actually made their situation much worse by trying to avoid a bankruptcy filing. There is an old saying about a road that is paved with good intentions, and that could not be truer than in this instance. Why bankruptcy over debt management? Let’s examine the answer.
Debt management companies are often discovered on the internet, and frequently have locations in states with very lax consumer protection laws. I always advise my clients to avoid any business, especially one as important as a financial services company, where they cannot walk into an office and meet with a person. I pride myself as being available to my clients practically 24 hours a day by phone, text or email, but nothing beats the ability to walk into my office and meet with me or my staff whenever necessary. Rule number one is to find a reliable, local professional you can discuss your debt problems with face to face.
Another problem with debt management or debt consolidation programs is that they cannot guarantee all of your creditors will agree to participate in their program. Most likely, more than one will not. It only takes one creditor to refuse to participate to blow your whole plan out of the water. Let’s assume you owe 5 companies money. 4 out of the 5 agree to accept a reduced payment, or to allow for payments over time through a consolidation program. If that one remaining creditor does not participate, they may proceed to file an action against you in court which could result in garnishment or your bank accounts or wages. It only takes one to keep the whole plan from working.
Additionally, debt management programs can continue to drag your credit scores down. As I discussed previously, bankruptcy can help your credit score rise by eliminating bad debt and improving your debt to income ratio. Debt management takes much longer to achieve, results in slow or no payments being reported to the credit bureau, and overall does not improve your credit worthiness.
Before you consider debt management or debt consolidation, consider contacting my office to discuss your options. Come in and meet with me face to face, and we can work on a solution to your debt problems.
Adam M. Freiman
Baltimore born and bred, Adam is a 1984 graduate of Pikesville High School, a 1988 graduate of Boston University and a 1993 graduate of the University of Baltimore School of Law. He has been practicing law for over 25 years locally and has handled everything from bankruptcy to large-scale criminal cases. Adam Freiman was the founder of one of the most successful bankruptcy law firms in Baltimore. After finding that bigger did not necessarily mean better, Adam decided that his clients were not best served by the vast array of associate lawyers and paralegals who were handling cases at his large firm. He left to form his own firm and now personally represents every one of his clients. When you hire Adam Freiman, PC you are hiring Adam himself and he will personally oversee all aspects of your case.
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