Accumulating a large amount in debt can make it challenging to pay it all off. Losing a job or other unforeseen circumstances can cause people to be overwhelmed with debt. Pennsylvania consumers may wish to better manage their debt by hiring a debt management company. The promises some of these companies make can seem too good to pass up, but those promises may be over-inflated or dishonest.
Often, unscrupulous debt management companies persuade consumers into believing they can reduce their debt to half of what they owe. Once they grab the consumer's attention, they charge upfront fees that only benefit the company, not the consumer. Also, these companies convince unsuspecting consumers to stop paying their creditors altogether. What they do not tell consumers is that they will end up owing the creditors more, and late fees will quickly accumulate.
Furthermore, the consumer stands a risk of being sued for any outstanding balances owed. To avoid falling into a trap, one is advised not to pay any upfront fees to the company. It's recommended that consumers hire a company that is nonprofit and licensed within their state. Lastly, one should research the background of the company with the Bureau of Consumer Credit Protection before handing over any personal financial information.
Consumers would be wise to make sure a debt management company is reputable and does not charge upfront fees. Sometimes Pennsylvania consumers are in such a financial spot that they cannot afford to pay any monthly payments at all. Individuals who are experiencing extreme financial hardships may want to consider filing bankruptcy protection. Bankruptcy can put creditor calls to a stop while discharging all unsecured debts. Legal support may be necessary to ensure forms are complete and accurate.
Source: The Portland Daily Sun, Watch out for debt management pitfalls, Marianna Fenton Hibbard, Jan. 21, 2014