Debt Relief Secrets and Scams in Raleigh, NC
Debt Relief Scams in Raleigh, NC
Debt Relief Scam #1 – Subprime banks are called equity lenders.
Be cautious of those who claim to “help” you avoid bankruptcy by consolidating and paying off your debts. Unfortunately, they may actually exploit you by taking away your home. These lenders charge exorbitant interest rates ranging from 9% to as high as 26%. Additionally, they burden you with hefty origination, closing, and broker fees, which are then incorporated into the loans.
Cameron Bankruptcy Law understands the unfair tactics employed by these lenders, such as flipping and packing, inflating appraisals, and over-insuring, all aimed at increasing their own profits. They also impose higher fees, points, and prepayment penalties. Predatory lenders often pass on the loan to others and base their lending decisions solely on the equity in your home, disregarding your ability to repay. Their ultimate goal is to repossess your home. It is important to note that they may claim you have to pay higher rates after filing for bankruptcy, conveniently omitting the fact that waiting just 2 years after your bankruptcy discharge and making timely payments could save you thousands and secure lower rates.
If you can’t pay your debts,
If you find yourself unable to repay your debts, it’s crucial to avoid resorting to a high-rate second mortgage. The consequences of borrowing from predatory lenders can be severe, potentially resulting in the loss of your home and the need to file for bankruptcy. Refinancing while your credit is poor is strongly discouraged. By doing so, you may transition from owing on a Class A home mortgage rate of 6-7% to owing on your home at significantly higher rates, reaching as high as 26% for B and C mortgages. It’s important to be aware that predatory lenders exploit your vulnerability by offering a false “solution to bankruptcy” while taking advantage of your home equity. At Cameron Bankruptcy Law, we understand the complexities of your financial situation and are here to provide guidance and support during this challenging time.
Generally, a debtor who’s considering bankruptcy…
The Subprime Lenders Don’t Care
Subprime lenders prioritize seizing your home’s equity at loan closing and resort to foreclosure when payments are missed. Their target is often the financially troubled and uneducated borrower. These lenders do not cater to sophisticated borrowers who seek better rates. Instead, they may even encourage mortgaging while your credit is poor as a solution to credit card debt and other problems. It is disheartening how some subprime brokers view borrowers as mere sheep to be sheared, resulting in pure greed. Unfortunately, their actions are legal.
In Congressional Hearings,
In congressional hearings, The Money Store and similar companies have faced accusations of being predatory lenders. The profitability of this business has led to many sub-prime lenders being acquired by reputable prime lender banks. For example, First Union owned The Money Store, although it preferred to conduct its questionable practices under a different name to distance itself from the predatory sub-prime lending reputation. Similarly, Equicredit was owned by Nations Credit. At Cameron Bankruptcy Law, we are well aware of the issues surrounding such lenders and can provide expert guidance and assistance when it comes to dealing with bankruptcy cases related to predatory lending practices.
Home Improvement Companies
Do not use Subprime Lenders!
Your best course of action is to work exclusively with a prime lender. This will ensure that you receive a favorable interest rate of 5-6%, or whatever the current prime rate may be. Keep in mind that if your credit is not in good standing and you have less than 12 months of consistent on-time payments, you will not meet the criteria for approval by a prime mortgage lender.
It May Be Difficult To Tell…
You do have choices
when it comes to getting a low rate mortgage and filing bankruptcy. First, you may be able to refinance a mortgage to a lower rate before filing bankruptcy. That might save you from having to file bankruptcy at all. If you go from a home mortgage at 10% on a $100,000 dollar home to a 6% mortgage you will reduce your monthly payment from about $1,000 dollars to $600. However you can only do this if your credit history is perfect prior to filing, you have made the last year of payments on time, and you don’t have too high of a debt to income ratio. If you refinance you can use the money for expenses such as home repairs, surgery, or necessities, and then file bankruptcy after you have no excess (non-exempt) equity in your home.
However . . . If you have good
If you have good or perfect credit and you want to see if you can get a prime rate mortgage, contact us and we can recommend someone that specializes in this! However, generally paying unsecured debts from your retirement or home equity is a poor idea. You can bankrupt with debts like this and often keep your home equity and retirement funds. Never refinance a home to consolidate debt unless you go to a lower interest rate, or you will probably eventually lose your house. There are only a few very weak laws that protect you from these people. Period!
Debt Relief Scam #2 – Erase Bad Credit Scam
The other common scam you hear about in bankruptcy is that you can erase bad credit. Every year someone claims that if you give them sometimes more than $3,000 they can erase your bad credit. There are even laws against these businesses, but like drug dealers, they get busted and then reopen shop making the same false promises under another name over and over again. You can only erase untrue items on your credit report. Anyone who knows anything about credit knows you can’t erase true, negative items from your credit report or invent a new credit history without committing fraud. This is called identity theft, and you can go to prison for doing it. There’s nothing a credit repair clinic can do for you that you can’t do for yourself.
Debt Relief Scam #3 – You Can “Protect Your Credit By Settling Your Debts!”
- They will charge you high fees.
- The effect on your credit will be just as bad as bankruptcy.
- Some companies won’t take the reduced payments and will sue you anyway.
- 90% of the people never finish these credit counseling plans that are set up.
- These debt settlement companies often only pay themselves. They pay themselves first and sometimes only pay themselves until they go out of business. That’s right. Sometimes, and all too often, they never pay the credit card companies, and then they file bankruptcy themselves after telling you not to. Plus, the creditor you settle with will send you a 1099 and you’ll be taxed on the “forgiven” part of the debt!
Debt Relief Scam #4 – Unknowledgeable Attorney
While generalist attorneys may suffice for ordinary legal needs, the intricacies of bankruptcy require a deep understanding that only a specialist can offer. By entrusting your bankruptcy issues to a generalist, you run the risk of crucial details being overlooked to your detriment. Not only that, but generalists often spend more time on each petition, resulting in higher charges. Furthermore, they may lack access to the top-notch software, reference books, and colleagues that a dedicated bankruptcy attorney possesses. Choose Cameron Bankruptcy Law for the expertise and resources that are essential for navigating the complexities of bankruptcy law.