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Bankruptcy Law Blog

Tuesday, December 13, 2016

Florida debt counselor owes $100M, files bankruptcy

Many Americans facing tough financial situations look for someone to turn to that they can trust to help them get into a better financial position. Unfortunately for many, the people they turn to end up making things worse.

Just this month Florida businessman Timothy McCallan, a so-called “debt counselor” is facing a $107 million judgment from an Alabama bankruptcy court. The judgment stems from McCallan’s involvement with a company called Allegro, which was shut down by a judge six years ago due to fraud. Not only is McCallan facing this judgment, he also spent some time in jail for committing fraud on the court.

According to court papers, McCallan offered debt settlement services to clients who paid over $100,000,000 to McCallan’s company to settle their personal debts and keep them out of bankruptcy. Unfortunately for those clients, most of those funds were never paid to creditors, but were instead pocketed by McCallan.

Sadly, this is not a unique story. Too many companies have preyed on consumers who are desperate for financial assistance to pay off their debts and avoid bankruptcy.

How can you protect yourself from unscrupulous businesses during financial distress?

For some people, getting out of debt is a high priority, and preferable to filing for bankruptcy. Here are some tips on how to avoid being scammed by companies that claim they can get you out of debt, settle your debts or fix your credit.

  1. Credit repair and credit counseling services – these can be great services for those that can see their way out of their financial crisis. Be sure to opt for non-profits and stay away from anyone who asks for money up-front. Check the Better Business Bureau to make sure the company is reputable and doesn’t have a history of complaints.
  2. Mortgage Consultants and Foreclosure Fixers – these types of companies usually ask for large amounts of money up front and may ask you to deed your house to them. Often, they end up filing for bankruptcy on your house without your knowledge. Do your research before handing over any money and do not deed your house to anyone.
  3. Don’t pay for credit reports – you can get a free credit report every year from each of the credit reporting agencies. Do not pay for this “service.”
  4. Avoid Paycheck Loans – these companies charge substantial fees for a short-term loan on your income or other assets. This will only put you further in debt.

When in doubt, talk to a bankruptcy attorney about a company you are considering. Sometimes bankruptcy may be the best option for individuals facing a financial crisis. It never hurts to consult an experienced bankruptcy attorney to discuss your options.

Worried about how to protect yourself during a financial crisis?

If you are facing a personal financial crisis, the best thing you can do for yourself is seek the advise of a trusted bankruptcy attorney. The experienced Alabama bankruptcy lawyers at Padgett and Robertson can assess your situation and provide you with expert advice on how to avoid being taken for a ride by unscrupulous financial companies. Call today at 251.342.0264 for a consultation.

 


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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