Drown in debt? Be Careful Who You Turn To For Help – NBC4 Washington

David Roos quit his job and moved to another state. For three months, he had no money, which caused him to fall behind on bills. With a near-max credit card and a large personal loan, he was at a breaking point.

Roos received a flyer in the mail from a debt relief company that would help him get rid of his debts with the help of a lawyer. Roos called the company and was told that in three or four years he would be out of this mess.

He had to agree to a number of conditions, including stopping paying his creditors, ignoring their appeals, and establishing a payment plan with the debt relief company. According to Roos, they started withdrawing $ 638 per month from his checking account.

Some of that money would go towards his repayment settlement, which Andrew Pizor, an attorney at the National Consumer Law Center, says is a classic model of debt relief.

“The money you pay each month is supposed to go into a special savings account and when there is enough money in it they call your creditors and say, ‘You know my client can pay you 50 cents a month. dollar, “Pizor said.

Of the $ 638 Roos paid each month, only $ 186 went to his settlement fund. The rest – $ 452 – was for expenses.

“I look at this and I gave them $ 11,500 over 18 months and in the end I only had $ 2,500 that was going to go towards the settlement,” Roos said.

The Federal Trade Commission says debt relief companies can’t charge you until they actually reduce your debt or reach a settlement agreement with at least one of your creditors. Roos said no one from the company he signed with ever contacted his creditors to negotiate as they promised.

Roos says he wishes he had contacted his creditors when he had problems paying his bills, instead of relying on a debt relief company for help.

When he finally called them, his creditors not only reduced much of what he owed, but he also paid them back without interest.

Tips for getting help with getting rid of your debt

  • Contact your creditors as soon as you realize you can’t pay your bill
  • Tell them your financial situation and what you can afford to pay
  • Ask to be put on a payment plan with a lower interest rate
  • Contact a nonprofit credit counseling agency who can offer free financial assistance and advice

Roos was also able to get most of his money back from the debt relief company. He’s lucky, because most people don’t. He has stayed on top of them and filed complaints with the Attorney General’s Office and the Better Business Bureau – steps you should also take if you’re having trouble with any of these companies.

About Hannah Schaeffer

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