Ten Minutes of Questions Between the Sales Call and the Signature
If you just finished a call with a national debt consolidation company and the representative wants your signature today, take time to check the offer first. The questions below show what the agreement can cost, how the payments work month to month, and what happens if a creditor refuses to wait. They also show where a local law firm such as The Wink Law Firm handles the same situation differently. Not every company in this industry works the way this checklist describes, and the point is to ask, not to assume.
Debt Consolidation and Debt Settlement Are Different Services
Many people who search for debt consolidation may need something else: debt settlement, which is one of the services The Wink Law Firm provides. The two terms are often used interchangeably, but they do not mean the same thing.
A true consolidation loan is one way to consolidate debt. It replaces several debts with one new loan, so you still owe the full balance, but now to a single lender. The Federal Trade Commission notes that some consolidation loans require your home as collateral, which puts the home at risk if you cannot make the payments. Debt settlement, in contrast, is a negotiation in which each creditor agrees to accept less than the full balance.
This difference matters because some companies advertise with settlement language while selling a consolidation program. The Wink Law Firm’s page on consolidation and settlement makes the same point. So the first question in a debt consolidation vs. debt relief comparison is simple: is this company offering you a new loan, or is it inviting you to participate in a debt settlement procedure so you can erase your debt for a fraction of what you owe?
The Low Monthly Payment Pitch Needs a Second Look
Some programs advertise a low monthly payment that looks manageable compared to what you pay across your accounts today. The Wink Law Firm reports that competing programs may quote small payments at first that rise over time.
These programs, advertised as debt consolidation, are actually settlement-style programs which depend on building enough cash to fund a settlement with each creditor, one account at a time. Creditors do not have to follow the schedule these companies create. The FTC warns that while you are in a debt settlement program, collectors may keep calling and you could be sued.
Consider a hypothetical. You enroll expecting to consolidate debt through steady deposits, and you are told to deposit $500 a month based on a projected settlement schedule. Several months in, a creditor files a lawsuit before enough money has built up for that account. The company then says you must deposit more, sooner, to settle that creditor’s account. Your deposit might rise from $500 to a much larger figure on short notice, and the original number turns out to have been an inaccurate estimate.
The Wink Law Firm can advise you on the correct way to begin debt settlement. Ask us how we can help you begin the process.
Deadlines and Pressure Are Reasons to Slow Down
A debt consolidation or settlement representative who says their company’s rate expires today, or who asks you not to consult anyone else, is probably not trustworthy.
Wink Law Firm begins by evaluating each client’s broader financial situation, not intimidating them with false deadlines or pressure. We explain credit and lawsuit risks in plain language, walk you through the benefits and risks of both bankruptcy as well as debt settlement, and even has attorneys on staff to help you settle the lawsuit before you face wage garnishment.
The Debt Consolidation Checklist to Run Before Signing
Get written answers to each of these questions from any debt consolidation company you’re considering:
- Is this a debt consolidation loan or a debt settlement program?
- What will I pay the company in total, including settlement fees and monthly account fees?
- How much of each monthly deposit is held for creditors, and how much goes to fees?
- When will each creditor receive money, and who decides which creditor is priority?
- If a creditor sues before my account has enough money to settle, how will you help me?
- Can my monthly deposit increase, and under what conditions?
- How will the program affect my credit, and how long do you expect the effect to last?
- Could any settled amount be taxable to me?
- Is a licensed attorney available to advise me if I am sued or face garnishment?
If the answers are unclear or the company will not put them in writing, you might want to reconsider hiring them.
A Debt Relief Attorney Reviews Your Situation Differently
A debt relief attorney starts with your full financial picture and thoughtfully explains the options that fit it, rather than rushing you into a program that may not be in your best financial interest. That comparison is the practical difference in debt consolidation vs. debt relief through a law firm like Wink Law Firm.
Our review covers your income and assets, which creditors are pursuing you, whether any creditor has sued or is likely to sue, and whether bankruptcy would cost you less than settlement. Wink Law Firm will also explain credit and lawsuit risks in detail. If a creditor has already filed suit, the firm can prioritize settling that account to help avoid wage garnishment. If your situation is more likely to be alleviated by Chapter 7 or Chapter 13 bankruptcy, we’ll tell you that from the start, because we want to help you find the quickest path to debt relief and fresh credit.
Speak With The Wink Law Firm Before You Commit
Schedule a free consultation with a debt relief attorney and Denver law firm that gets to know each client before recommending solutions. Call Wink Law Firm at (720) 523-0620 before you sign anything with a national company. Your credit score will thank you.