Published by Mark
People under great financial strain sometimes grasp at any offer of help, trying at all costs, to avoid bankruptcy. All too often, that’s all those poor people get – all costs. As a bankruptcy attorney in Indiana for the past twenty-plus years, I can understand why folks might snatch at straws and go, as I put it in my earlier blog, Looking For Help In All The Wrong Places.
In order to alert my Indiana bankruptcy clients about predatory practices to watch out for, I follow news about “debt help” scams around the country. The Federal Trade Commission has charged several different sets of Florida residents with violating federal law by deceiving consumers into believing their homes could be saved from foreclosure in return for a fee. Not only didn’t the scammers help stop the foreclosures, they induced the consumers to wait passively for weeks rather than contacting their lenders to explore possible options. The upfront fees these crooks charged the consumers were never refunded, and some consumers lost both the fee money and their homes!
Some “debt settlement agencies” are predators, too. A person pays money every month to be deposited into a trust account, with the idea that the agency will use the money to work out a lump sum settlement with the creditors. But, while the money is accumulating (minus the “commission” the agency takes from each payment), the interest continues to compound on the debts. The debtors are making payments to the debt settlement agency, but they’re not making payments to their own creditors! Meanwhile, nothing is protecting the debtors from having their wages garnished, or from having liens put on their property. A bad situation becomes worse.
According to the Center For Responsible Lending, even legal payday lending practices could be considered predatory, in that the interest rates are extraordinarily high, as are late fees and penalties.In Still A Pan For Payday Loans, I explain that these cash advances, especially when “rolled over” or extended, account for a downward spiral in many people’s financial situation.
Post-bankruptcy, it’s important to watch out for predators as well. Unscrupulous creditors often flood people emerging from bankruptcy with low-balance credit-card offers to “help rebuild credit after bankruptcy”. These cards sometimes have activation fees and membership fees that push users near the credit limits before they even begin. After bankruptcy, I actually advise clients to open a credit card account, but to use it solely for emergencies (see The Hair Of The Dog That Bit You.).
Today more than ever, people need advice and they need help. With so many job layoffs, unbearable medical costs, and rising costs of living, many individuals are looking for guidance and, for many, their debt problems are urgent. It’s crucial to get legal advice quickly – from all the right places! – and select a course of action.