Consumers beware: bankruptcy scams operated by cons and fraudulent firms are preying on the short and long-term financial well-being of those already in desperate situations.
Perhaps you think you are out of options.
Your finances have been upside down each month for the last year, and no matter how much effort you put into changing that around, a workable solution doesn’t seem available to you.
You are behind on the mortgage, and your credit cards are maxed out. No bank or other lending agency is willing to give you any additional funds, and your friends and family may not be able to help you out financially.
Therefore, you have decided you are going to file for bankruptcy.
Be aware: there are companies out there which will act like they want to help you with this process; however, they may turn out to be operating a bankruptcy scam.
How can you tell if the firm or agency is a legitimate company, or if they are a scam? There are a few indicators which you should be on the lookout for.
Recommendation: Work directly with a lawyer.
The easiest way to ensure you have a legitimate partner with you as you go thru this process is by going directly through a bankruptcy lawyer.
Lawyers have a license to practice law. To maintain that license, they need to adhere to certain rules and regulations. If they perform an action which is not legal, they could lose their license. Therefore, you have an extra assurance that the information you receive is not meant to mislead you.
Depending upon the area in which you live, there may be numerous lawyers to choose from. You may be able to consult with one of your choosing for free on an initial visit, just to ensure you are comfortable with the attorney as a representative for you.
The attorney should be able to walk you through your available options. This includes the various types of bankruptcy which are available, as well as ensuring you have explored all other non-bankruptcy options applicable.
If you decide you do not want to go with a lawyer and want to instead go with an agency, this option is available to you.
However, here are some activities an agency may perform which, should any of these events occur, should raise a red flag before you ever agree to working with the agency.
Do they ask for money upfront?
If a company asks you for money upfront to deal with your bankruptcy or credit issues, steer clear.
They may say you need to pay for a credit report; this is not true, as there are numerous agencies where you can get your credit report for free.
They may say there are some administrative costs which must be paid before the agency takes you on as a client. Yet again, this should not be the case.
Your best bet: find a non-profit organization/firm to work with. These organizations generally do not require upfront payments to begin your bankruptcy process.
Do they offer a ‘Quick Fix’?
The adage of “If it sounds too good to be true, it probably is” applies to bankruptcy services, as well.
If there is a quick fix to help with getting you out of debt, you would probably already be aware of it.
To be clear, there is no quick fix to getting out of debt. That is, unless you happen to come into a windfall of cash.
The tried-and-true process of budgeting & methodically paying down your debt overtime is repeated by personal finance experts time and time again, for good reason. When it comes to getting out of debt, that’s the only answer you’ll need.
Be very wary of any company promising you a ‘quick-fix’.
What do they say will happen after the Bankruptcy is filed?
There is so much information available concerning how to apply for a bankruptcy, and the services which are provided in the process. However, what services does an agency offer after the bankruptcy is filed?
There are numerous steps within the process, and it does not end when the bankruptcy is filed. The main question to ask them is what will happen to your credit report once the bankruptcy is filed.
If they tell you the negative information on your credit report will fall off, this should set off another alarm. No company should be offering or telling you negative, legitimate information will fall off your credit report, as if it never happened.
Although filing a bankruptcy allows you to clear some debt you may have, your credit score will be negatively affected by the bankruptcy filing for up to seven years.
If the company you choose does not warn you of all the negative effects that filing a bankruptcy will cause, then they are clearly not putting your best interest at the forefront.
Unfortunately, when it comes to filing for bankruptcy, there are numerous companies out there who want to take advantage of your desperation.
These firms or agencies will generally promise you things they cannot deliver. It’s imperative for you, as an educated consumer, to be wary of empty promises from companies who do not also offer realistic expectations or consequences.