We are the Covington, Kentucky, law firm of Michael E. Plummer & Associates. Our attorneys and staff have helped thousands of people throughout Kentucky and Ohio get financial relief by filing for bankruptcy. Our firm has had the opportunity to talk to many people who, before deciding to file for bankruptcy, tried so-called “debt consolidation” agencies in an attempt to repay their debts. Debt consolidation services may also be known as credit counseling agencies.
Generally speaking, if you are thinking about using a debt consolidation service to repay your debts, you should think again and contact a Covington debt consolidation and bankruptcy lawyer at our firm first. Debt consolidation agencies charge people a fee to negotiate repayment terms with your creditors. You would pay the debt consolidation agency a sum of money, which they would disperse to your creditors after taking their fee. There are many problems with this approach.
First of all, your creditors are not under any obligation to accept payment terms from a debt consolidation agency. Therefore, if the agency is unable to negotiate repayment terms, your creditors will still take action against you. Secondly, if you miss a payment, your creditors are free to terminate your payment plan, leaving you in a worse position than you were before. Further, debt consolidation agencies do not do anything you can already do yourself. If you want to repay your debts, you can talk to your creditors directly in order to work out a repayment plan.
People can pay debt consolidation agencies for years without gaining any traction on their debts. In the vast majority of cases, if you are thinking of going to a credit counseling or debt consolidation agency, you are better off filing for bankruptcy. If you file for bankruptcy, you will have the legal protection of the bankruptcy court behind you. Your creditors will not be able to take any action against you. In addition, bankruptcy discharges all unsecured debts. Therefore, your unsecured creditors, such as credit card companies, will have no legal recourse to collect your debts.