Many clients who file for Chapter 13 or Chapter 7 bankruptcy protection have already tried unsuccessful Credit Repair, Debt Consolidation and Repayment plans and programs. Many people find that even for such programs and plans that are not outright scams, the programs and plans just simply do not work over the long-term. Sometimes the payments are too burdensome, or the repayment period is too long. Frequently, a life or wage change upsets and terminates the plan or program after thousands of dollars have been wastefully paid.

Chapter 13 lets you repay some portion of your debts, and causes forgiveness of the rest. If you really wish to repay some portion of your debt with payments that you can afford, you may wish to consider consulting with us about a Chapter 13 bankruptcy case wherein the Court decides how much debt is reasonable for you to pay back. The Judge considers your finances, then orders you to repay some small percentage of your debts over a period of usually three years, and then orders that the balance of the unpaid debt be discharged and wiped out.

Unlike Debt Consolidation programs and plans, Chapter 13 is very flexible. If something bad happens during your 36-month Chapter 13 plan, you can ask the Judge to lower your original repayment plan payments when something comes up in your life, such as a job change, family problem, car repair or other unexpected income loss or increased expense. Chapter 13 is a compassionate and controllable debt repayment plan presided over by a wise and experienced Federal judge.

Beware of swindles. As early as 2000, the US Federal Trade Commission, the Department of Justice and 47 other federal, state and local law enforcement and consumer protection agencies surfed the Web looking for illegal scams that promised consumers that they can restore their creditworthiness for a fee. Over 180 Web sites were put on notice that their credit repair claims may violate state and federal laws for credit repair ads that appeared to be making deceptive advertising claims or promoting illegal schemes.

As far back as 2000, the US Federal Trade Commission began sending E-mail warnings and letters to website operators that offered to remove negative information from a consumer’s credit report or to issue a false Social Security number and “start fresh” with a new identity. Such schemes are in violation of the Credit Repair Organizations Act (CROA), a new federal law designed to help consumers challenge fraudulent credit repair swindles.

The US Federal Trade Commission recently announced another enforcement action on July 1, 2009 against debt consolidators and other credit repair swindles. These enforcement actions continue today across the country. On July 1, 2009, a press release by the Florida State Attorney General Bill McCollum announced that the state of Florida had joined with the Federal Trade Commission (FTC) and other state authorities to announce a coordinated effort targeting scammers capitalizing on the current economic climate. The operation focused on a variety of schemes including bogus employment opportunities, fraudulent business ventures, falsified government grants and phony debt reduction services, as well as the placement of unauthorized charges on consumers’ credit or debit cards.

“As our state and our citizens face tough economic times, some individuals are taking advantage of the situation by preying on the vulnerability of others, making circumstances more difficult,” said Attorney General McCollum. “This operation will help create a necessary deterrent so these unscrupulous people stay out of our state.”

Florida’s actions included a settlement with MagicJack resolving allegations the company marketed a “free” 30-day trial for its long distance phone equipment, but actually charged and debited consumers during the trial. Other settlements with debt relief organizations were also part of the sweep including Family Credit Counseling Corp., of Ft. Lauderdale, that allegedly misappropriated debt management funds, and Financial Freedom Resources, a Clearwater-based telemarketing company that promoted alleged debt reduction services.

The law enforcement sweep, dubbed Operation Short Change, included enforcement actions by 14 states and the District of Columbia, as well as 15 FTC cases and 42 law enforcement actions by the U.S. Department of Justice. The FTC cases included eight new law enforcement actions against companies that have conned consumers struggling to make a living and pay their bills during these difficult economic times. The defendants in these cases were charged with making deceptive or unfair claims and, in some cases, with making illegal transfers of electronic funds or violating the Telemarketing Sales Rule.

In addition to Florida, states participating in the sweep were California, Illinois, Iowa, Kentucky, Louisiana, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, Texas and Wisconsin as well as the District of Columbia.

The US Federal Trade Commission also produced a new consumer education video featuring consumer victims and a former scammer who gives an insider account of how these operations use high-pressure tactics and celebrity endorsers to trick cash-strapped consumers. More information is available on the Federal Trade Commission site.

We would be more than pleased to consult with you before you sign up for a Debt Consolidation, Repayment, or Credit Repair program or plan so that you can at least obtain some basic information on the Chapter 7 and Chapter 13 bankruptcy option. Please call us today to schedule a free, no obligation consultation with our attorney at one of our convenient locations.