Sacramento Bankruptcy: Debt Relief Alternatives

Sacramento Bankruptcy: Debt Relief Alternatives

Bankruptcy is an option to eliminate or reorganize your debt. There are other alternatives besides bankruptcy, though. Debt relief companies and agencies can help, but be cautious taking this route.

Many debt relief companies and agencies promise to provide results, but don’t deliver. While there are certainly legitimate enterprises offering help for those in need of debt relief, many do not do as promised. Often payments are not made to creditors, there are hidden fees and no protection from lawsuits. Scams can sometimes occur as this story suggests. Sometimes the debt relief company or agency becomes yet another creditors piled on top of the rest of your debt.

The debt relief industry, not taking into account bankruptcy practitioners, is a multi-billion dollar industry. Many times, too, the debt relief companies and agencies are owned by the very creditors your are seeking to suppress. A common scenario is when you contact a creditor, say a credit card company, and convey a concern you have with your debt, interest rate, minimum payments or a host of other potential problems. They can refer you to a debt relief company or agency that, surprise, is owned by the same creditor. The purpose of the “debt relief” in this setting is not to manage or lower your debt; it is to funnel as much money as possible to the parent creditor company. This does not help you.

Debt relief organizations, even if effective at minimizing your debt, do not protect you from potential lawsuits. While a bankruptcy prevents a creditor from even contacting you, much less suing you, debt relief companies can’t do this.

Another pitfall to potential debt relief companies and agencies is that if they do arrange for a payoff of your debt over time, you are not paying your debt. Credit ratings and scores can be damaged more detrimentally than even a bankruptcy in such settings.

The goal in debt relief is to get rid of your debt or somehow manage it to provide a fresh financial start. Debt relief companies and agencies may help, but there is no certainty. Bankruptcy is conservative sure-thing approach to dealing with your debt. It may not be the right fit for all in need of debt relief, but it is an option worth considering if you are in need of lessening your debt load.