Bankruptcy.  The laws of Bankruptcy changed dramatically in October 2005.  Harris County individuals who make more than the Harris County median income of $35,000.00 (the number differs based on head of household.  This is an approximate number), may not be able to file for a Chapter 7 liquidation.  Chapter 13 Reorganization may not be attractive for many reasons, and may actually delay your optimal financial recovery.

Debt Management Companies.  Debt Management Companies not only claim to be an alternative to bankruptcy but also promise to reduce your debt by 50% or more.  All you do is sign up for their services and let them handle your creditors.   Of course, their first action is to advise you over the phone that you should not pay your unsecured creditors (usually credit cards) and instead pay the Debt Management Company.  Upfront.  For their fee.  Which is often 15% of the total "enrolled" debt.

The warning sign should be that their contract terms are opposite of their sales pitch.  For example the contract will state that your credit report and credit score will be destroyed by the failure to pay your bills.  The sales pitch will tell you that your new debt free existence will make a good credit score unnecessary.

In the last year a new law was passed that regulated Debt Management Companies and prevented them from charging up front fees.  As a result, many of these companies have gone out of business and you may have noticed that you do not hear their ads as frequently as before, if at all.

If you suffered lawsuits, judgements and ruined credit by following the advice of one of these companies, contact us.