Have debts and you live in New York? Well, it’s not uncommon. But paying back is a daunting task for sure.

For some consumers, bills can reach a point where they are overwhelming. If you are overwhelmed with debt and considering bankruptcy, you should also consider other options. One alternative to bankruptcy is debt consolidators, agencies that promise to reduce debt and make it more manageable.

While using such a company can help people resolve their debts, there are some things that you should know before using a debt consolidator. New York State law affects debt consolidation in several ways. One law covers “budget planning,” where the debtor pays the budget planner regularly who in turn makes payments to creditors based on an agreed upon plan.

In New York State, a budget planner must be a non-profit corporation or an attorney. These non-profit corporations are required to be licensed by the Department of Banking. Other individuals or companies are prohibited from performing budget planning services as defined by this law.

Since many debt consolidators also perform credit repair services, credit repair laws apply as well. In New York State, any advance fee for credit repair, such as a “consultation” fee, is illegal. It is also illegal for a company to misrepresent that a credit report can be “wiped clean” if the information is timely and accurate. There are also regulations for the format of a credit repair contract.

To begin with, manage your debts yourself. Contact your creditors and work out payment plans with them; they would rather know that you are planning to pay them regularly than to get nothing at all.


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