Call a Bankruptcy Lawyer or Debt Settlement Company?

Dallas - Ft. Worth Bankruptcy Attorney Explains the Differences

Video Transcript:

David Shuster: 

The benefits that can be gained by filing a bankruptcy are definitely worth talking to an attorney.

Molly Hendrickson: 

If you've been weighed down with unmanageable debt, who should you turn to for help? We're gonna find out right now on this episode of Ask The Lawyer, my guest is Texas Attorney David Shuster. I wanna remind you, if you wanna ask David questions about your situation, it's easy, go to askthelawyers.com, click the button up top that says Ask a Lawyer, or you can always call the phone number you'll see at the top of the screen. David, thanks for joining us today.

David Shuster: 

Yeah, thank you, Molly.

Molly Hendrickson: 

So bankruptcy, just the word alone provokes anxiety in people. Why do most people avoid filing for bankruptcy?

David Shuster: 

Yeah, Molly it does have a sort of a bad rap. The name itself just has a connotation of something that's horrible, "If I do that, it means that I'm just at the bottom, I'm not gonna ever recover if I have to do something like that," so it's mainly just folks that really obviously haven't done a bankruptcy before, haven't had the need to look at that option before, and are not really wanting to go in that direction. I spend a great deal of my time talking to first time callers that have debt, and they will often right away say, "Well, I don't wanna do a bankruptcy," and so I have to spend 15 minutes or more sort of cajoling them, and it's just hearing me out to know if a bankruptcy is a good idea for that person, for that family, because it doesn't take that long to find out, and talking to an attorney about 15 minutes or so, you'll find out. And there is very often reasons to not do bankruptcy for sure. But the benefits that can be gained by filing a bankruptcy are definitely worth talking to an attorney.

Molly Hendrickson: 

When people get threatening mail or email from one creditor, but not another, or if one debt is charged off or written off while others are not, what does this mean?

David Shuster: 

Well, yeah, a lot of times too, Molly, they'll say, "I'm just calling about this debt, that other debt has been charged off, so I'm not as worried about it," but in fact, that still means that they could get a lawsuit at their door, it's fully collectible. It often just means that it's been written off on that creditor's books for tax reasons or it was sold to another creditor. So it doesn't mean anything that it's dormant or anything. It just means like it's done charging you all those revolving interest and penalties, and so this is sort of the fixed amount that you owe, but the creditor still has, in Texas at least, four years from the time of the last payment to pursue this in court.

Molly Hendrickson: 

So it could still come back to haunt you.

David Shuster: 

That right, yeah. It doesn't mean it's gone away. Yeah.

Molly Hendrickson: 

Yeah. What about debt settlement companies, what are they, and have you worked with people who have tried to get rid of debt using these companies?

David Shuster: 

A lot of times people will call me looking for answers after they've tried the debt settlement companies. There's a lot of them out there, the problem is a lot of people don't know that they can hire a local attorney for cheaper than actually paying a debt settlement company. And when you have a debt settlement company and the creditors are calling you, and it'll cause the calls to stop, but the lawsuit will come, and then you'll need to go get an attorney for that. By our calculations from clients that have anecdotal evidence came to us after being in the debt settlement plans, they end up paying over 80%, sometimes higher or total if they have outstanding debt, including the fees that they're paying to these companies, which are very high. And so they're just not realistic. They will give you a short-term Band-Aid that'll make you feel good, you'll pay monthly, $600 a month or whatever to a company, but in the end, we find that clients will end up paying dollar for dollar, paying a lot more using these companies without really a local person, a professional to go see and talk to.

Molly Hendrickson: 

Not a lot of the long-term gain there. If someone is sued by a creditor, does that change anything in how you deal with it?

David Shuster: 

Well, yeah. If you're sued by a creditor, you want... If you're settling the debt, you wanna try to settle it before then, but we handle a lot of credit collection lawsuits. Every once in a while, we can get them dismissed, but most often, we take care of them by settling them, and we can handle them, what changes is you'll pay additional attorney's fees for dealing with it by the time it becomes a lawsuit. But the debt in bank for bankruptcy purposes is fully discharge-able, even if you have a judgment, we can get rid of that. So if you waited that long to where you have lawsuits, don't worry about it, if you do have judgments, we can still discharge those in bankruptcy.

Molly Hendrickson: 

David, thank you so much for taking the time to talk to us today.

David Shuster: 

Okay, thanks.

Molly Hendrickson: 

And that's gonna do it for this episode of Ask The Lawyer. My guest has been lawyer, David Shuster. And I wanna remind you, if you'd like to ask David questions about your situation, you can go to askthelawyers.com, click the button at the top of the page that says Ask a Lawyer, and it will walk you through the very simple process. Thanks for watching. I'm Molly Hendrickson for Ask The Lawyers.

Disclaimer: This video is for informational purposes only. In some states, this video may be deemed Attorney Advertising. The choice of lawyer is an important decision that should not be based solely on advertisements.