Should I use a Debt Consolidation Company or file Bankruptcy?

I wish I had a dime for every client who thought they were doing the right thing by paying a debt consolidation company each month to pay their creditors and then they receive a summons/lawsuit from one of their creditors.   They are upset and wonder where their money went ? What was it used for? Is it refundable? What are the monthly fees for if the company was simply banking their money?  They ask me, what is the point of hiring a debt consolidation company? 

If you are considering hiring a debt consolidation company, know the correct questions to ask.  I have gathered a list of questions over the years.  My clients educate me on so many things, it is amazing.
Ask:
How long they have been in business, are they are a corporation, do they have references?  Learn more about their practices on google and the Better Business Bureau.
Ask them to email you a contract so you can thoroughly digest it.  Look at their services carefully.  Draw up a list of questions. What is the cancellation policy on the contract and will/when you get a refund?  What monies will be refunded? Find out their Monthly fee for the service.
Ask them to explain their method of negotiation.   Is it with one creditor at a time?  What happens to the other creditors during this time?  Can other creditors report defaults on your credit reports? Can other creditors suit you?
Ask how the settled debt will appear on your credit report and how long will it be on your credit report?
Is there a ‘stay’ on creditor’s contacting you like there is in filing a Bankruptcy?
Ask what the advantage of hiring a debt consolidation company is over filing a Bankruptcy.

Contact a Bankruptcy Attorney first.

Sherry Ellis Law, PLLC
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