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Florida Seniors - Beware Of Debt Settlement Companies and Their Promises

Florida Seniors - Beware Of Debt Settlement Companies and Their Promises
January 4, 2023

Elder Needs Law is a Florida law firm that focuses on issues of primary importance to senior citizens. Our bankruptcy department only assists Floridians over the age of 65. Some elderly individuals find their way to us after attempting the services of a non-attorney debt-settlement service.

Debt settlement is simple in theory: First the senior citizen’s debts are negotiated with a creditor to reduce the amount owed and payment due.  Sounds simple and straight forward enough: the debtor cannot repay a debt, so the creditor agrees to less so they receive something instead of nothing because the creditor knows if the debtor files a Chapter 7 bankruptcy there is a very real chance, they will receive nothing.

In reality, debt negotiations involving senior citizens is a vicious game of chicken. It normally starts with the debt settlement company telling the debtor to stop making payments to the creditor - because if the elder debtor is current on the payment, the creditor will not negotiate. Once a payment is missed the creditor starts pressing the debtor for payment by calling and sending collection letters threatening to report the debtor’s missed payment to the credit bureaus, increasing their interest, charging late fees and threatening legal action.  Meanwhile the debtor’s account balance is increasing from interest, late fees, and collection fees. 

Finally, one side blinks: either the creditor is convinced to take a settlement or risk receiving nothing in a bankruptcy; or the debtor realizes the debt settlement is getting him nowhere except making his credit score sink and debt rise so he does what he should have done in the first place and actually files bankruptcy.

Debt settlement companies make tons of money conning the unsuspecting debtor.  Many debt settlement companies have caused more trouble for their clients than help. Debt Relief USA is a prime example. Like many debt settlement companies, Debt Relief, USA advised clients to stop paying their debts and instead deposit the money into a Debt Relief USA settlement account. Allegedly these funds, held by Debt Relief USA, would be used as settlement funds to settle with client’s creditors once the client built up enough funds to negotiate with the creditors.  However, clients had a hard time building up funds because clients were assessed fees for services including “administration fees” and monthly “maintenance fees” that reduced the client’s funds and prevented any serious debt settlements.  In the off chance a debt was negotiated successfully Debt Relief, USA changed a 13 percent “negotiation fee.”

Debt Relief USA filed a Chapter 11 bankruptcy in 2009.  When it filed it owed clients $5 million from these settlement accounts.  The bankruptcy court approved a $3.7 million disbursement to Debt Relief USA’s clients. Later the case converted to Chapter 7 and Debt Relief USA was no longer.

Bankruptcy attorneys who serve the elderly see the debt settlement song repeated day in and day out.  Many senior citizen debtors spend years spinning in circles with the debt settlement companies only to find their financial situation worse than when they started.  Many debtors after years with the debt settlement company end up doing what they tried to avoid and file bankruptcy.  Many would have their credit score and been back on their feet by the time they filed bankruptcy if they had only filed instead of doing debt consolidation.  

Before agreeing to any debt settlement relief program, discuss your financial situation with an experienced elder needs bankruptcy attorney. There are powerful federal laws that can protect you from overwhelming debt, and a bankruptcy attorney can review your legal options without risk to you.  

In addition, debt settlement companies have hidden costs to the consumer.  The repayment plans are normally three to five years.  These repayment plans normally are payments of several hundred dollars a month.  If these payments were invested in the consumer and not paid to the debt the payments could help create a nice nest egg for the consumer.  So sometimes it is best to just cut your losses, file bankruptcy, and then rebuild your financial life.  

In addition, a credit score is used in many things of daily life these days.   A creditor score is used in determining how much a consumer will spend on rent, car loans, car insurance, life insurance and many other things.  So instead of having a low credit score weighing the consumer down and costing them money it is normally just better to file the bankruptcy and start rebuilding.  So, the question is are you going to pull the band aide off slowly and do debt settlement or are you just going to rip the band aide off and file bankruptcy.

At Elder Needs Law, PLLC, all we do is consumer asset protection for the elderly.  We protect assets from the government, nursing homes, spouses, family members, and creditors.  If you are considering debt consolidation, please consult with a bankruptcy professional that focuses their practice on the senior population.  You have more options than you might think, and some options have hidden costs and fees.  You owe it to your family to weigh all your options and to be fully informed with a plan of action in place.  Please contact Elder Needs Law, PLLC at 305-614-7379 or look us up on the web at for more information on how the asset protection attorneys at Elder Needs Law, PLLC can help you and your family.

Jason Neufeld is the Founder and Managing Partner of Elder Needs Law, a Florida estate planning and elder law firm he created in 2017. With more than 15 years of experience practicing law, he represents clients in a wide range of legal matters, including Medicaid planning, estate planning, elder law, probate, Medicare, and life insurance.

Jason received his Juris Doctor from the University of Miami — School of Law and is a member of the Florida Bar and the Broward County Bar Association. He has received numerous accolades for his work, including being named a Rising Star and Super Lawyer by Super Lawyers and among the Florida Legal Elite by Florida Trend in 2024.

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