Beware of debt consolidation scams!

Many companies claim to be "debt consolidation" specialists. BEWARE! They often promise to reduce your debt by 50% or more or promise to eliminate late fees and other charges while consolidating your payments into "one low monthly payment." They rarely deliver on these promises.

I have clients each day come to my office after having been ripped off by supposedly reputable companies claiming to be debt consolidation experts. In my experience - debt consolidation does not work.

Often clients begin paying the debt consolidation company a monthly fee to "service" the debt. This fee is in addition to the actual money paid to the company to pay down your debt. The rub? If you miss one payment you are right back where you started from in terms of interest and penalties and you are out the money paid to the debt consolidation company as well! Usually without any principal reduction.

Your credit score is not improved and your debt is not eliminated. You've simply thrown your needed cash to a company that you did not owe money to before.

There are other problems as well - debt consolidation companies often take a high percentage of your monthly payment as a servicing fee and only pay a very small amount to your creditor. Most clients actually would be better off paying the creditors a small amount without the "help" of the debt consolidation company.

The lesson? If you're in a position where you are considering attempting to consolidate debt you would likely benefit from a free bankruptcy consultation. You can be secure in knowing that if you call my office you will speak directly to me - a Florida licensed bankruptcy attorney - and that my advice to you will be in your best interest.

Only chapter 7 bankruptcy eliminates unsecured debt and ceases all collection efforts forever.