If you’ve gone to the web looking for answers, there’s a good chance you have come across debt-settlement agencies, many of which claim they can cut their clients’ credit-card debt as much as 60 per cent.

Some — once they’ve got you on the phone — even contend they can completely eliminate your credit-card debt.

But Canada’s consumer watchdog, the Financial Consumer Agency of Canada (FCAC), issued a warning earlier this month cautioning consumers to think twice before paying one of these agencies for their services.

“We’ve started to get more calls about it, and debt management is something that is on people’s mind in the new year, so we thought this was a good time to put the information out there,” FCAC spokeswoman Julie Hauser says.

The federal agency warns these debt-relief companies often use high-pressure sales tactics and charge significant fees. And the FCAC is not the only government agency concerned about these companies’ practices.

In early November, Manitoba’s Consumer Protection Office also issued an alert about debt-settlement companies.

“This is kind of a brand-new phenomenon that first appeared in the United States as a result of the real estate problems there,” says Jan Forster, director of the Consumer Protection Office.

Since 2009, they’ve started up in Canada.

Both the feds and the province are circumspect in their warnings. They want consumers to be sure to understand what they’re getting into before signing a contract with a company to negotiate their debts on their behalf.

But the executive director of Community Financial Counselling Services (CFCS) in Winnipeg says consumers should steer clear of these companies altogether because they often charge substantial fees in exchange for services that dubiously purport to significantly reduce a consumer’s unsecured credit-card debts.

“There’s often an up-front fee to do the initial counselling to determine what the person’s debt is,” says John Silver, with the United Way-funded non-profit. “Then consumers are asked to sign a contract, where they pay a monthly fee to the agency so it will negotiate on the consumer’s behalf.”

The problem is consumers end up spending money on significant fees to the debt-settlement agency that could have been used to actually pay off their debts.

Debt-settlement companies often recommend clients stop making minimum payments and instead set aside money to pay the settlement once it’s been negotiated. But while they claim to negotiate on consumers’ behalf, they do not guarantee they will successfully negotiate a reduction in their clients’ debts.

“In the agreements that we’ve seen, it says quite clearly that there are no guarantees, and what we know is the creditors do not have to negotiate with these companies,” Forster says.

“They could refuse to negotiate or even talk to them, so consumers are paying up front without any guarantee that there will be any positive outcome for them at all.”

Often compounding problems is these companies tell consumers to stop all contact with creditors because they will do the communicating with the creditors on the consumer’s behalf once the consumer signs a contract.

Maura Drew-Lytle, spokeswoman for the Canadian Bankers Association (CBA), says consumers facing debt problems should always maintain contact with their financial institution.

“Banks are willing to be flexible and help customers make alternative arrangements to repay the loan,” she says.

She adds Canadians are well advised to heed the FCAC warning about debt-settlement companies’ “unrealistic claims about slashing their debt” and “false claims about government involvement or approval.”

In fact, Silver says many reputable creditors won’t negotiate with agencies they do not consider legitimate. In a recent meeting, Silver says a CBA official informed him the organization is developing a list of agencies, including debt-settlement firms, with whom banks won’t negotiate.

That has proven difficult, however, because many debt-settlement companies open, close and re-emerge with new names.

In the last year, Silver says he has seen a handful of contracts signed by unhappy consumers who paid hundreds of dollars in fees.

“In one contract that I saw, the person would have been charged $3,500 in fees — all going to a company, and that was about the amount they claimed they could reduce the debt through negotiation,” he says. “There was absolutely no benefit to this person.”

Consumers often pay monthly fees for extended periods because the company has told them negotiating a settlement will take several months.

In the meantime, they stop making minimum payments, which negatively affects their credit rating. Because there’s no guarantee of success, consumers pay ongoing fees, assuming their debt is being taken care of by the agency while their credit rating plummets and their debt grows. And they end up in a worse situation than when they started.

Connie, a Winnipeg resident whose name has been changed to protect her identity, says she ended up paying an upfront fee to a U.S.-based firm called Vortex Debt Group after it cold-called her in late 2010. Vortex persuaded her that in exchange for the upfront fee and ongoing monthly payments, it would negotiate with her creditors to clear up her credit-card debt of more than $15,000. The company advised her to stop making minimum payments and cease all contact with her creditors. Once she signed on, Vortex withdrew $408 from her bank account a few days later. Soon after she stopped making minimum payments, the calls from her creditors began.

“They were upset because no one had contacted them,” she says. “But they (Vortex) had taken my money.”

She then got in touch with a local, non-profit credit-counselling agency, which advised her to stop further payments to Vortex and even change her bank account.

“I was so embarrassed by the whole thing because I had been managing to keep up with my payments.”

She has since started working with CFCS, but the ordeal left her credit rating in tatters.

“I have no use of credit cards anymore, so I don’t have any backup in an emergency.”

The 1-866 contact number Vortex provided to Connie is now out of service. But Canada’s Credit Counselling Society’s website, www.nomoredebts.org, states Vortex has since re-emerged as two other companies. Calls by the Free Press to both companies earlier this week were not returned.

“Many of these companies are Internet firms with offices in the U.S,” Silver says. “Florida seems to be a popular location.”

Most firms only started operating in Canada after U.S. lawmakers began cracking down on debt-settlement companies’ predatory practices, he says.

Given recent statistics on Canadians’ consumer debt levels, we’re fertile ground.

Credit-monitoring agency Equifax recently released figures indicating Canadians collectively owe $480 billion in consumer debt, and about $6.7 billion of it is in arrears.

Needless to say, many of us are facing desperate debt circumstances and might be tempted to use a debt-settlement agency’s services, which offer a seemingly easy way out, Forster says.

“There could be times when debt-settlement agencies have been able to help people reduce their debt — I don’t know for certain — but what I do know is they have very significant upfront fees and there’s no guarantee of service,” she says. “It just doesn’t make sense to use that type of service.”

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Provincial regulation upcoming

The provincial government is expected to announce in the coming weeks changes to the Consumer Protection Act introducing stricter regulation of debt-settlement agencies operating in the province. “We’ve been actively working with stakeholders and looking at other jurisdictions with legislation like Alberta, and we’re very close to developing a strategy that would deal with the issues that are most important, including the upfront fees,” says Jan Forster, director of the Consumer Protection Office. In the meantime, Forster says people facing debt problems can contact the Consumer Protection Office. “We can provide them with a list of organizations that can actually help them.” For more information, contact the office at (204) 945-3800, toll-free at 1-800-782-0067 or by email at consumers@gov.mb.ca

Got debt?

Community Financial Counselling Services can help.

You might have noticed this agency’s counsellors have offered their expertise in recent Free Press Money Makeovers. Community Financial Counselling Services (CFCS) is a free-of-charge, Winnipeg-based service offered to individuals and families who are having difficulty paying their bills, including credit-card debt payments. The organization will help clients develop budgets to manage their costs and provides them with the full spectrum of workable debt options, including bankruptcy and consumer proposals. When possible, they will also help individuals negotiate their debt with creditors to reduce their payments and, in some cases, have their debts reduced, says executive director John Silver. Still, Silver says debt-reduction settlements are rare. “In order to do a settlement, you need assets or funds to be able to actually do it, and then you have to have a situation that the creditors will agree it is the best alternative.”

Debt counsellors… in the pocket of the banks?

Debt-settlement companies frequently tell potential clients that non-profit agencies like CFCS are funded by lenders.

“Because credit-counselling agencies get some remuneration from the banks or the creditors, they (debt-settlement companies) claim that we’re in league with the creditors,” Silver says. But he says non-profit agencies work for their clients and are partly supported by creditors because they help indebted consumers get back on solid financial footing. Debt-settlement companies also frequently tell consumers that going for credit counselling will lower their credit score, whereas hiring a debt-settlement company to negotiate a reduction in debt won’t. Silver says debt counselling has no effect on consumers’ credit ratings. Many CFCS clients, however, do enrol in its debt-management program that does affect their credit rating. But the program also reduces clients’ interest costs on their debts — sometimes to zero interest — and provides them with an affordable monthly payment until all debts are paid in full. But the credit ratings of clients of debt-settlement agencies are also negatively affected because they stop making payments.

It is clear that European equity markets are lacking confidence even though the worst one could say about the morning corporate news is that it is mixed.

Clearly the mood toward L’Oreal is that “its not worth it” as the cosmetic manufacturer dipped 1.5%. On the plus side Vodafone gained 1.4% on news that the Supreme Court in India ruled that the mobile phone carrier announced it will not be liable for taxes on the acquisition of Hutchinson Whampoa’s wireless activities back in 2007. On balance though the retailing news has been really shabby for revenues may have risen but only on the back of huge price discounts in the run up to the Christmas season. Consumers have been cash strapped and so have increased their elasticity of demand. That means the demand curve has made a shift toward a flatter or horizontal bias therefore eroding pricing power. With Internet or As Seen On Screen “ASOS” buying steadily rising across Europe the elasticity of substitution has also risen…in short “there isn’t not a whole lot of pricing power around”.

So let us turn our minds to Greece. If you saw yesterday’s paper on kurtosis one can see (no prizes here) that Greece is further away from realm of feasible finance than Pluto is from the sun.

Private investors will have to swallow 68% losses…but there may be some players that hold out against this. Surely it only takes one dissenter to confirm publicly that any haircut they are being saddled with is involuntary for the triggers in CDS structures to be activated. Even if all the private sector participants rolled over the fact that they will be offered 30 year Greek paper that will plunge in value immediately is enough to tell anyone that the game is up.

Yes, we know there is a game to be played and at all times the vested parties will seek to be constructive, however, the Euro and the Euro Zone would garner far more respect if it were to be honest and do the following:

1. Accept that Greece is bankrupt.
2. Invite the IMF to openly help Greece manage its default.
3. IMF nurses Greece for several years outside the Euro.
4. ECB provides huge liquidity assistance to impacted banks outside of Greece.
5. Greek banking system consolidates and ECB gives special parachute aid.
6. Either Euro Zone does more to help Portugal, or as is likely it to is cut loose and we do not repeat the Greek fiasco in terms of time and money.

Lest we have any doubts about the continued grievous state of suspended animation on Main Street, a new study by the nonpartisan Employee Benefit Research Institute (EBRI) confirms the obvious: the recession and unemployment have put the cost of health insurance out of reach for more Americans.

According to the study, from December 2007, when the recession officially began, to August 2009, the percentage of private-sector workers with employment-based coverage in their own name fell from 60.4 percent to 55.9 percent.

During this same period, the percentage of workers with coverage as a dependent increased from 16.6 percent to 17.3 percent, and reached 17.5 percent in July 2010, in part a reflection of the decline in coverage that workers received through their own employer.

By December 2009, when the recession officially ended, that percentage of private-sector workers with employment-based health insurance bounced back slightly to 56.6 percent.

Paul Fronstin, author of the EBRI study, says the percentage of Americans with health insurance has been shrinking since the 1980s, in large part due to the impact of rising health care costs on employment-based plans. The percentage of workers offered coverage and the percentage that decline it have remained steady during this period, he adds.

Unemployment showed an equally direct impact on the numbers of Americans with health coverage. During the recession, when unemployment nudged double digits, the uninsured rate for workers increased from the upper 14-percent range to just over 18 percent. Eight in 10 uninsured American workers cited cost as the main reason they passed on coverage.

Health care reform, which began in earnest last year with the Affordable Care Act, is bringing about much-needed corrections to the way we deliver health care in this country. But the act can only do so much.

Without a stronger economy, America’s ability to afford health insurance will be slow to recover.

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ACI has never charged our customers up-front fees for debt settlement services…”

Simi Valley, California (PRWEB) January 19, 2012

ACI-Solutions (http://www.aci-solutions.com) has launched a blog called The Debt Pro. The Debt Pro blog will focus on educating consumers about their options for debt relief, explaining the difference between debt consolidation, debt settlement, filing for bankruptcy and other debt relief activities. The Debt Pro blog will also publish information about debt settlement companies that are being sanctioned by the Federal Trade Commission (FTC) because they continue to use unfair or fraudulent business practices that hurt consumers seeking debt relief.

“I’ve been working in the debt relief industry for eight years,” said The Debt Pro author and President of ACI-Solutions, Darrell Warner. “ACI has never charged our customers up-front fees for debt settlement services and have always delivered debt settlement results to the best of our abilities given our clients’ situations. I am writing The Debt Pro blog to expose the bad guys that continue to take advantage of consumers, and to give consumers the information they need to get help.” ACI, Inc. has an A-rating with the Better Business Bureau. Debt settlement is the only service ACI-Solutions provides.

Founded in 2004, ACI, Inc. helps consumers become debt free using settlement programs tailored to fit their personal needs and their ability to repay. ACI, Inc. negotiates and finalizes debt settlements prior to calculating and charging a fee to the consumer, a practice that became a law by the Federal Trade Commission as of October 2010. The company provides budget analysis and savings and debt management tips to its customers, so that once their debt is settled they have more of a chance to maintain their financial freedom in the future. ACI’s process includes a free consultation when consumers call in to assess each situation and evaluate all viable options. If debt settlement is the best program for the consumer, ACI develops a payment plan for debt management tailored to each person’s budget and decides on an appropriate time frame for the consumer to get out of debt as quickly as possible. Unsecured debts that are eligible for settlement are Credit Card/ Department Store debt, Medical Bills, Personal Loans (unsecured), Repossessions, Past Due Utility Bills, Overdue Rents, and 2nd Mortgage Deficiencies (from foreclosure or short sale). For more information about ACI, Inc., call 1-888-420-4791 or email info(at)aci-solutions(dot)com, and visit ACI’s website.

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A leading debt management organisation has become a founder member of the Association of Professional Debt Solutions Intermediaries (APDSI) – an association dedicated to professionals within the debt solutions industry.

The organisation, Release Money Group, offers bespoke advice on a range of financial solutions and services and includes debt companies Varden Nuttall and Debt Release Direct.

Alasdair Warwood, Secretary General of APDSI, commented on the new membership. He said: “We are pleased to welcome Release Money Group as a founder member of the Association.

“The directors of the business have extensive experience of the market and understand the difficulties that consumers are facing in the current economic downturn. Their membership will strengthen APDSI’s ability to meet the needs of the market in a compliant way.”

APDSI was established in November 2010, and was set up with the aim of helping intermediaries and brokers offer a range of debt solutions to financially disadvantaged clients, whilst complying with regulations on consumer credit and debt advice.

The association wants to ensure intermediaries can offer all forms of debt solutions, including Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs), Protected Trust Deeds (PTDs) and bankruptcy.

Stephen Slater, CEO at Release Money Group, said: “Release Money Group is proud to be a founder member of APDSI. In an industry that is striving to drive compliance and best practice, we want to make sure that any potential intermediary or broker has access to as comprehensive a range of services as possible. Following our recent DRO-approved intermediary status, we truly believe that we can offer the full spectrum of debt solutions.

“All people should be able to call on companies that they can trust to offer truly ethical and best advice. We believe that APDSI is a forum that will allow like-minded individuals the medium to be able to share these wants, along with ongoing best practices.

He continued, “As a DMC we want to see a level playing field when it comes to client acquisition and we believe that joining APDSI will allow us to try and drive this objective.

“We have to remember that TCF is not just an acronym to be banded around ad infinitum but a way of behaving that is driven through our company by everyone, from the chairman to the office junior. APDSI reflected the same ethos.”

Alasdair added: “The emerging regulatory environment, bringing as it does greater clarity as to what constitutes debt advice and greater focus on the increasing compliance requirements placed on all practitioners, requires that the intermediary market has a strong representative voice both amongst regulators and amongst debt solution providers.

“An important element in achieving that, given the myriad of small intermediaries, is an association like APDSI which can help in the education and the vetting of such intermediaries. For it to achieve those objectives, APDSI aims to achiever amongst its members the broadest coverage of debt solution providers to help spread the message. Release Group’s membership is therefore a welcome extension of APDSI’s ability to influence and persuade.”

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Insurance Journal reports that a rash of recent headline-making hacks, including the breach of 100 million Sony customer accounts and 360,000 Citigroup accounts, has corporate risk managers clamoring for multimillion-dollar cyberinsurance coverage. That’s hardly an overreaction considering that the average data breach last year cost $7.2 million, according to March figures from the Ponemon Institute.

The problem is, insurance companies don’t feel particularly comfortable throwing down on a risk that has as short a track record as hacking. How do you price it? What do you include and exclude? And how can you reasonably predict the future risk in a field as hyper-driven as computer technology?

Then there’s the absence of standards to consider. Your auto insurance company can require you to wear seatbelts and drive on the right. How do you do that on the information superhighway?

During the past decade, several companies, most recently Travelers, have responded with cyberinsurance packages that attempt to mitigate the liability and loss risk of a data breach. In the current economy, it may be one of the few coverage areas that’s actually growing.

But such new contracts also come peppered with all manner of exclusions that attempt to “buckle up” the insured’s data protocols.

“Some, for example, exclude coverage for any incident that involves an unencrypted laptop. In other cases, insurers say, coverage can be voided if regular software updates are not downloaded or if employees do not change their passwords periodically,” according to the report.

Sadly, you and I have been left out of this equation. Companies are covering their own assets with little regard to the damage their data breaches cause to us, the inconvenient human form factors.

Where’s our coverage? Where’s our relief?

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Webinar Wednesday, hosted by GreenPath University, premieres January 18, noon EST with an interactive discussion on “Unlocking the Secret to your Credit Score”

FARMINGTON HILLS, Mich., Jan. 16, 2012 /PRNewswire-USNewswire/ – GreenPath Debt Solutions, a nationwide non-profit financial counseling agency, will be premiering a new way for learning with the launch of the group’s online “Webinar Wednesday,” starting January 18.

Each Wednesday, GreenPath will host educational webinars starting at noon EST. The webinars will be coordinated by GreenPath University, the company’s education group, and last 45 minutes with time available for questions and answers. GreenPath will feature a different topic each week.  

“We’ve had great interest in the first webinar with people signing up across the country from New York, Michigan, Georgia, Alabama, Pennsylvania and several other states,” said Megan Bridgett, GreenPath trainer and co-lead for GreenPath’s Webinar Wednesday. “We are looking forward to a fun, informative session with lots of interaction between our instructors and those online.”

The January 18 webinar will cover “Unlocking the Secret to Your Credit Score.” This course is designed to help gain a better understanding of what makes up a credit score and what individuals can do to improve it.

Webinar Wednesday is another way that GreenPath Debt Solutions provides educational outreach to the community.  Registration is free by logging on through GreenPath University at www.greenpath.org/university and clicking on the “Free Classes Every Week” announcement.

Other upcoming webinars include:

12 Money Mistakes You Can’t Afford to MakeGreenPath has discovered the common mistakes that can cost people hundreds of thousands of dollars, and will teach participants how to avoid them. Wednesday, January 25 and March 14.

Protect Your Identity From email scams and phishing to credit card skimming and fake pre-approval offers, identity theft is on the rise. This course will teach practical tips on ways to avoid becoming a victim, as well as what to do if you suspect your identity has been stolen. Wednesday, February 1 and February 22.

Keys to First Time Home Buying Buying your first home can be an exciting and memorable experience. It can also be confusing and overwhelming. If you are considering buying your first home, you will want to attend this course. GreenPath will provide important tips to make the first-time home buying experience a successful one. Wednesday, February 8, and February 29.

What’s On Your Credit Report? Reviewing your credit report is an essential step to financial success. GreenPath will discuss ways to track your credit report for free, understanding what is on your report, as well as handling inaccuracies and ways to prevent fraud.  Wednesday, February 15 and March 7

About GreenPath Debt SolutionsGreenPath Debt Solutions is a nationwide, non-profit financial organization that assists consumers with credit card debt, housing debt and bankruptcy concerns. Their customized services and attainable solutions have been helping people achieve their financial goals since 1961. Headquartered in Farmington Hills, Michigan, GreenPath operates more than 50 full-time branch offices in Michigan, New York, New Hampshire, Colorado, Florida, Texas, Vermont, Illinois, Indiana, Wisconsin, Arizona and Wyoming. GreenPath also delivers licensed services throughout the United States over the Internet and telephone. GreenPath is a member of the National Foundation for Credit Counseling (NFCC) and is accredited by the Council on Accreditation (COA).  For more information, visit www.greenpath.org.

Available Topic Expert(s): For information on the listed expert(s), click appropriate link.Andrew Johnson http://www.profnetconnect.com/andrew-johnson

SOURCE GreenPath Debt Solutions

As he drummed up the UK as a destination for Asian investment, Mr Osborne drew
a clear line between Britain’s fiscal discipline and that of the rest of the
Euro zone.

“The financial crisis and the deep recessions has been the toughest of
reminders of the simple truth that you have to earn your living in this
world,” he said.

“And the lesson of the past year has been that global confidence in a country
depends on its determination to deal decisively with the challenges it faces
– and by getting to grip with our debts, Britain has shown it is determined
to do that.”

A straw poll of the floor, however, revealed that barely any of the attendees
saw investment potential in Europe, preferring the prospects of China, South
East Asia, India and the United States.

While most of Asia’s economies are still showing robust growth, led by China,
there is widespread anxiety that Europe’s problems could trigger another
financial crisis.

Exports from Asia to Europe have slowed, and Haruhiko Kuroda, the president of
the Asian Development Bank, said he had noticed Western banks pulling away
from Asia and tightening credit, a move which has seen borrowing costs in
the region begin to creep up.

KK Modi, the founder and chairman of the Modi group, the £1.8bn Indian
industrial conglomerate said India’s economy was being hurt by capital
flight as developed countries began to pull out of the region.

“India’s companies are making lots of money but investment is falling.
Interest rates have gone up because the money is not available. The money is
being pulled out of India and it is not being replaced by other Asian
capital. Asians do not understand each other’s markets. We do not understand
Chinese laws, for example,” he said.

And while Mr Flint predicted a timely end to Europe’s debt woes, his outlook
for the year remained cautious.

“What the European crisis has pointed out is that the whole world has to
reflect very carefully about what the aggregate of political promises on
benefits, healthcare and pensions is and whether it will continue to be
affordable given the global growth profile of today,” he said.

“We expected in 2007 that there would be a very strong rebound in 2012. Now we
have the realisation that these burdens may not be affordable. Everywhere I
go, people understand the problem acutely. They know what needs to be done.
They understand the dire consequences if it is not done.”

He said companies were building up their balance sheets in part because of the
lack of liquidity in the financial system, but in part out of fear at their
spiralling pension costs.

John Rice, the vice chairman of General Electric, concurred that dealing with
Europe’s debt problems would be less difficult, in the long term, than
resolving the “social overhang” being caused by the West’s ageing population.

He said GE would focus this year on the huge demand for infrastructure in the
developing world.

“We are seeing an alignment around basic infrastructure needs. The Arab Spring
may be a sign of that, although it is bigger than the Arab Spring,” he told
the forum.

“What we are seeing is that with social and income inequalities, more and more
countries have realised they have to address that. And they are doing this
by investing in infrastructure – power generation, healthcare and clean
water. That is why they are focusing on this. They realised what happens
when you do not provide these basic needs.”

The three-judge panel of the Sixth Circuit Court of Appeals in Cincinnati ruled 2-1 in favor of health care reform’s individual mandate provision that will require all Americans to purchase a minimal amount of health insurance by 2014.

Judge Jeffrey Sutton, a George W. Bush appointee and former law clerk for Justice Antonin Scalia, and Judge Boyce F. Martin, a Jimmy Carter appointee, voted to uphold the individual mandate. Judge James Graham, a Ronald Reagan appointee, cast the dissenting vote.

The decision marks the first time that a Republican-appointed federal judge has affirmed the legal merits of the provision, which cites a 1942 Supreme Court decision granting Congress the power to regulate interstate commerce.

Previous challenges in U.S. district court have been decided on party lines. Democratic appointees have upheld the law in four courts; Republican appointees have declared key provisions unconstitutional in two courts.

This court challenge by Ann Arbor, Mich.-based Thomas More Law Center claims that while Congress was granted the power to regulate activity, it has no such constitutional mandate to regulate inactivity, such as failing to purchase health insurance. The center claims such a mandate would place an undue financial burden on its plaintiffs.

But the court upheld the right of Congress to regulate the market of self-insurance for health care, in which Americans try to get by without paying for health insurance. This market directly affects interstate commerce by effectively shifting the costs of the uninsured onto to those who have health insurance.

The government argued successfully that the individual mandate was necessary to keep the costs of health care reform from unfairly falling on the insured and providers.

“Congress had a rational basis for concluding that the minimum coverage provision is essential to the Affordable Care Act’s larger reforms to the national markets in health care delivery and health insurance,” Judge Martin wrote for the majority.

More than two dozen states have filed legal actions challenging health care reform. The fate of the ACA will likely rest with the Supreme Court.

What significance would you place on this latest ruling, the first by a federal appeals court?

And did it leave you celebrating or fuming?

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I am in the worst kind of financial hardship. My wages are already being garnished, which makes it difficult to keep up with mortgage and utilities. I can’t file bankruptcy because I don’t have the money to pay, and my mortgage is now behind. My credit score is in the low to mid-500s. I don’t know what to do. I am applying for loans but keep getting turned down. I pleaded with the debt collection agency to work out a monthly payment plan, but it is not willing to help. I don’t know what else to do.— RichDear Rich,

You are attacking this problem from the wrong end. Saying you don’t have the money for bankruptcy and pleading with a collector are nonstarters in my book. When a person is serious about getting something, they sometimes say they’ll do it if they have to beg, borrow or steal. Well you already know that begging and borrowing won’t work for you. That leaves stealing! Not someone else’s money, but your own.

It’s true a bankruptcy lawyer may not want to take your case unless you can give him or her a fee up front. After all, you are about to stiff others whom you promised to pay, so the lawyer has a valid concern about working with you without payment in advance. Here are three suggestions to getting around this problem.

First, you can search for a pro bono attorney at probono.abiworld.org. You may be able to get legal help for free.

Second, you may be able to file your case on your own if you do some research. It is called a pro se filing and happens all the time if your case isn’t too complex.

Third, you could take your next paycheck, pay no one and go directly to your attorney’s office and file.

Once you have filed for bankruptcy, your wage garnishment will cease. Creditors included in the filing must stop all collection activity after a bankruptcy is filed, including garnishment proceedings. Your extra wages should help you catch up on your mortgage payments and assist in solving one of your financial troubles.

But to ensure this mess won’t happen again, what you need is to determine the underlying causes of your debt, so you know and understand how you ended up in your current financial hardship. Even more importantly, you need to know how to prevent ending up there again. To do so, I recommend you gather all your financial statements, bills, etc., and take a comprehensive look at where you are and why it happened.

It may help to have an unbiased, expert opinion on your financial situation. You can enlist the help of a certified credit counselor for no charge. Contact a nonprofit member agency of the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling for assistance. You’ll need to contact them anyway as a part of your bankruptcy filing (you must receive pre-filing counseling). Your counselor will review your income and expenses and help you piece together how you ended up with a wage garnishment and are now behind on your mortgage.

Moving forward, keep in mind what you learned from your exhaustive review of your finances, follow a spending plan that keeps your expenses below your income and save money in an emergency savings account. We all make mistakes in life. The goal is to learn from them and not repeat them.

Good luck!