If I recently I lost a judgement for a outstanding bill, can I hire a debt consolidation firm to help me?
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If I recently I lost a judgement for a outstanding bill, can I hire a debt consolidation firm to help me?
Asked on September 7, 2012 under Bankruptcy Law, Wisconsin
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Debt consolidation firms are often dangerous things to hire. That's because:
1) The way many of them work--by having you pay them, instead of your creditors; they then withhold the money until there is enough to make a lump-sum settlement offer--is not actually legal. That is, once you delay or miss payments, even if it's part of a debt consolidation strategy, you are in default: your credit can be damaged, and the creditor can take legal action.
2) Many of these firms charge a surprisingly high fee for their services. The money you pay them is money that does not go to paying your debt.
By all means explore whether or not a given firm offers you good value for your money, but be very cautious about these factors. You are often better off simply contacting the creditor (or their attorney) yourself and trying to negotiate a settlement.
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