Should I Use a Nationwide Debt Settlement Company?
In my debt relief practice I am coming across more and more consumers who have used nationwide debt settlement companies to help them manage their debts and negotiate settlements on their behalf, only to regret the decision to sign up with these national debt settlement companies at a later date. With that said many nationwide debt settlement companies are licensed in the State of Washington, but not all of them. Nationwide debt settlement companies as well as companies actually located in the state of Washington must comply with the Washington Debt Adjusters Act under RCW 18.28 which requires debt adjustors to charge no up front fee’s and limit their fees to 15% of the total debt listed on the signed contract which includes payments for any third party trust accounts used for holding client funds and making disbursements. If a consumer decides to cancel services with a nationwide debt settlement company, any funds in a third party trust account must be refunded. Consumers should know that attorneys such as Symmes Law Group, PLLC are exempt from the Washington Debt Adjustors Act and do not need to meet its requirements as attorneys are not considered debt adjustors.
It is also important to know that many nationwide debt settlement companies use a company called Global Client Solutions to manage your payments as a third party processor and trust account servicer. This company has a history of working with many debt settlement companies who have been sued in the state of Washington and across the country for violating various debt adjusting and consumer protection laws. Global Client Solutions has also been sued itself on a national level by the Consumer Financial Protection Bureau and in the state of Washington.
At the very bottom of many debt settlement company websites you will find a disclosure in very small print which reveals what you might expect working with that particular debt settlement company. An example of what that disclosure may include is that that clients who join their programs can expect on average 50% savings BEFORE their fees are included. When you add in the nationwide debt settlement companies fee’s your savings may only be 30%, but that does not include taxes you may have to pay on the forgiven debt as any debt forgiven over $600 may be subject to federal income tax. The disclosure may also say that the results vary and not everybody completes the program and that while in the program your credit score may be negatively affected and you may be sued by creditors for non payment.
What Do Nationwide Debt Settlement Company Website Disclosures Mean?
If you enroll with a nationwide debt settlement company they may state for example that you can expect to save potentially 30% on average and that does not include paying taxes on debt forgiven over $600. Additionally what they don’t mention is that to obtain a favorable settlement you will need to stop making payments on your debts which will increase you total debt in the short term, hurt your credit, and open you up to potential lawsuits and debt collection phone calls due to non payment.
The potential to be sued for debts due to non payment is what causes consumers to reach out to a debt settlement attorney to learn further about their options. In my experience consumers typically accuse nationwide debt settlement companies of not settling their debts in time to avoid the lawsuit or not informing them that they could be sued on the debts when it all could have been avoided in the first place had the consumer talked to a debt relief attorney from the beginning of their financial problems.
Is Using a Nationwide Debt Settlement Company a Good Idea?
For most people I would say that signing up for a nationwide debt settlement company is not a good idea. While on its face, having you pay no up front fees with the goal of making you debt free in 2 to 4 years sounds great. However the truth is there may be better options which can accomplish the same goals for a lower cost and that have less of an impact on your credit and your sanity from being sued by a debt collector. Debt settlement in my opinion is best suited for people who have already been delinquent with their debts and have lump sums to offer up front to negotiate settlements of 50% or less in many cases. Otherwise chapter 7 bankruptcy or chapter 13 bankruptcy may be the best fit to eliminate debt or pay off debt over a 3 to 5 year repayment plan and avoid being sued by a lawsuit.
Finally, if you do want to proceed with a nationwide debt settlement program I would always advise using somebody local or a debt settlement attorney who can help you in a similar fashion as any company operating on a national level and likely save you on fees associated with the settling of your debts without the worry of thinking about whether you are being taken advantage of as attorneys are regulated by their states bar association and are subject to rules of professional conduct in order to maintain their bar license. Additionally a local attorney can take creditor calls and assist with defending a debt collection lawsuit and settling the case prior to any judgment as part of services offered.
If you live in Washington State and are considering hiring nationwide debt settlement company or are looking to settle your debts, contact us or give Symmes Law Group a call at 206-682-7975 to learn about your options first.