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Debt Settlement Companies

The ads on the radio and television are everywhere, but does debt settlement really work?

Unfortunately, many people who contact us do so after they have engaged the services of a debt settlement company. Its almost understandable with the sheer volume of radio and television ads that these companies place. The outrageous and unbelievable claims make you want to believe them. "We have information that the credit card companies don't want you to know!" and "You are entitled to a reduction of your credit card debt, up to 55%" are two of our favorites (or rather, least favorites).

In our opinion, debt settlement companies come in two forms. The first is the company that tries to help, but who charges too much.

 Often times, there is an up front fee and then they add on a percentage of the debt that they can save for you as an additional fee. In most cases, it looks like you are saving quite a bit but after their fees are factored in, you have no real savings over what you could have negotiated yourself.

We had a client who owed $20000 in debt to a creditor. He engaged a debt settlement company to assist. He began making monthly payments in the amount of $1000 to this company.  After several months, the debt settlement company told him that they were able to have the creditor agree to a $12000 settlement, but when it was all said and done, the client had made 18 monthly payments. As you can see, that is not much of a discount when you pay $18000 on a $20000 debt. The debt settlement company's fee was $6000. (by the way, we have never charged even half of that amount on the defense of a credit card lawsuit).

The second type of debt settlement company is simply the company that is a scam. Numerous of our clients have been taken by these companies. They get you to agree to hire them, they tell you that they will take care of everything once you make several payments, they tell you that you will not get sued and then, poof, they are gone and you still owe the debt (more debt actually, because the interest continues to accrue).

Back to the outrageous claims that we mentioned above. You are not "entitled" to any sort of reduction in credit card debt and any claim to the contrary is plain false. A credit card agreement is a contract, with terms and conditions, that both parties need to meet.

What you are entitled to is to know your rights and obligations under that contract. Interest rates must be spelled out with particularity, late fees and over the limit charges as well. A credit card agreement contains some very difficult language that is too difficult for the average consumer to understand.

At our firm, our approach in defending credit card cases is to force them to prove that you owe what they say that you owe. If the lawsuit is filed by the original creditor (the bank or lending institution that gave you the credit account) then we look to the terms and conditions of the contract, and the other documentation that goes along with the credit agreement to see if they can prove what they need to prove.

If the lawsuit is filed by a collection agency or a junk debt buyer, our approach is more agressive. We strike at them with everything that we have by filing what are called "objections". These objections question the legal sufficiency of the lawsuit and in most cases will result in a complete dismissal of the lawsuit.

Contact our office today at 412-281-1250 or 1-888-536-6644 for a no cost, no obligation review of your debt collection law issue.

Clay Morrow, Esq.

Clay handles the claims that are filed against debt collectors who make illegal threats or who place improper marks on your credit report.  Clay typically can make the debt collector pay your legal fees.

Greg Artim, Esq.

Greg defends consumers who have been sued by junk debt buyers, collection agencies or credit card companies. The odds of success in these cases are tilted strongly towards the consumer.

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Visit our PA Credit Card Blog for a collection of articles and posts about Pennsylvania credit card laws and some of the credit issues that we have faced.
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At Morrow and Artim, P.C. our focus is on Pennsylvania Consumer Law, whether its defending against collection agency lawsuits, suing debt collectors, handling unfair trade practice claims or assisting with identity theft matters.

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