Beware of consumer debt counseling or debt management programs.  The truth is that not everyone offering to help you get control of your finances has your best interests at heart.  You need to understand the debt counseling/ debt management process before you ever sign up with one of these companies.

Understand what you are Getting for Your Money

In some programs, a counselor will negotiate with your creditors or makes payments on your debts for you.  Make sure this service will deal with all of your debts.  Some creditors flat out will not negotiate with these services.  You need to understand what happens to your money after you pay this service.  What the service will do with your money if they are not able to solve your debt problems.
I have seen debt management contracts that provide the service makes several thousand dollars off of you with no guarantee.  The service will often settle a small debt right away to “earn their fees” but then leave you high and dry when a large creditor takes the step to collect from you.
Understand who you are Hiring
So you have decided to “try” Debt Settlement prior to bankruptcy.  You are not alone; hundreds of my clients have “tried” then ultimately hired me when the settlement program failed.  Know who you are hiring!
If you are going to “try” Debt Settlement, hire a local company.  Research the company before you hire them.  Think of it like this, you are going to give this person hundreds if not thousands of dollars to solve your financial problems.  Do you know their name, do you know where they are located, their actual physical address, and do you know if you can get your money back?  Time and time again I see people fall for a program they found on the internet based outside of Michigan.  They have sent thousands of dollars to a PO Box in Florida or some other state.  They only hire me when one of their creditors sues them and they have wasted years and thousands in a program that just did not work.
Understand what they are solving
So this company is going to resolve your $20,000 in credit card debt for only $10,000.  Do you understand that if they solve your debt for 50% of what you owe, the other 50% will be reported to the IRS as income?  That means you will owe income taxes at the end of the year!
Maybe you have credit card bills, but you also have a high interest car loan, tax debt and payday loans.  Is your “Debt Management” company going to resolve all of these issues, or just your credit card debt?
Understand the Chapter 13 Bankruptcy
A Chapter 13 Bankruptcy is a repayment plan in which you propose a percentage that you can repay creditors.  In a Chapter 13, your creditors are bound by a court order that they have to accept your repayment plan.  A Chapter 13 is designed to resolve all of your debt (not just your credit card debt) and protect your assets.  Best yet, the debt forgiven in a bankruptcy is not taxable like it is in a debt management program.
With our offices centrally located in Livonia, we represent clients throughout Metro Detroit and beyond, including  Westland, Garden City, Wayne, Redford, Belleville, Farmington Hills, Plymouth, Canton , Taylor, Romulus, Northville, Commerce Township, Wixom, Dearborn, West Bloomfield and Detroit