Michael McLaughlin LLC

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Michael McLaughlin LLC

Is A Debt Consolidation Plan Better Than Filing Bankruptcy?

The subject of debt consolidation is a hot topic right now. I can’t turn on my television without seeing multiple ads from entities like Credit Associates that claim they have an absolute right to negotiate and address individuals’ debts through informal processes. However, in my experience, debt consolidation services that heavily advertise on the radio and on television overpromise and underdeliver. These entities are not equipped to address certain situations, such as those involving debtors who have very significant debts and 10 to 20 different creditors.

Creditors have no obligation to sign on to any interest moratorium, interest reduction, or debt reduction. Over the course of my career, I have only seen a few isolated instances where an agreement to a reduction of interest or principal balance on a small amount of debt was reached. Despite this, debt consolidation services are being used with more frequency. Approximately one-third of my clients now come to me after a failed debt consolidation plan after having paid thousands of dollars to a debt consolidation company to address their debt. In these cases, the creditors never agreed to a debt compromise, and choose instead to file lawsuits against my clients, thus precipitating bankruptcy. Some clients were in debt resolution plans requiring payment of over $2,000 per month to a debt consolidation company when they realized that they were still not going to be able to repay their creditors. This all the money they had spent had essentially accomplished nothing…Read More

What Are Creditor’s Rights?

Creditor’s rights is a generic term describing a remedy that a company who lends money or extends credit to an individual or business can enforce. A creditor may have a right to proceed to enforce a contract to repossess collateral posted as security for a loan. The contract could contain terms other for payment of a debt. It might include a provision that would allow for an injunction against a company that attempts to compete with another company…Read More

Michael McLaughlin, Esq.

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(908) 373-8500

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