by Attorney Kara O’Donnell of Quincy, MA.

Before you take the step of filing for bankruptcy, it is wise to read up on the law, the different types of bankruptcy filings (Chapter 7, Chapter 11, Chapter 13) and the options you have within the bankruptcy law. Here are some resources for you to use that will help you ask more insightful questions of your bankruptcy attorney, should you decide to file for bankruptcy protection.

The American Bankruptcy Institute has a web site for consumer bankruptcy that is full of useful information on the bankruptcy process.

Some good books on the topic of bankruptcy include:

CHAPTER 13 BANKRUPTCY, 9TH ED. by Stephen Elias and Robin Leonard

HOW TO FILE FOR CHAPTER 7 BANKRUPTCY, 15TH ED. by Stephen Elias, Albin Renauer and Robin Leonard


Credit After Bankruptcy by Stephen Snyder

These resources will provide you with a wealth of information that you can use to determine if bankruptcy is the right solution for you. They will also help you be an informed consumer as you meet with your bankruptcy attorney. Bankruptcy is not a do-it-yourself proposition. The risks are too high and the rules are too stringent for you to go it alone. Consult an expert bankruptcy attorney if you are considering filing for bankruptcy.

If you have a question regarding Bankruptcy please contact us at 857-526-1355 or visit and we can connect you with one of our experienced Bankruptcy Attorneys. The first consultation by telephone is free. Our firm will assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help!

Please feel free to complete our free bankruptcy evaluation at and we can quickly determine if you are a qualified candidate for bankruptcy.

Kara O’Donnell

Law Office of Kara O’Donnell

Quincy, MA

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Debt Management Companies

September 11, 2009

by Attorney Kara O’Donnell of Quincy, MA.

As a practicing  bankruptcy attorney in Massachusetts I am asked legal questions almost everywhere I go.  Some of the best are at the bus stop from my neighbors.  They are “everyman” questions, questions that I think alot of people are wondering about but that some are not able to ask if they don’t have an attorney relative or neighbor. . .

Today I ran into a neighbor who brought up an interesting topic: Debt Management Companies.  The gist of her question was, “Who are they and why is it that you can end up owing MORE money by using them?”

My answer went something like this . . .

“Much like the Bird Flu Virus, debt management companies and their ads seem to have come out of nowhere and taken over the airwaves.  Just go to the Legal Services section of Craigslist and you see not only ads by attorneys (which you’d expect to see) but also ads by debt management companies and by attorney referral companies.”  (More on referral companies in the next blog.)

“Basically, the companies have you sign up and you agree to pay them for their services in attempting to reduce your debt (usually a credit card) balance or interest rate.  They can offer no guarantee as to likelihood of success as it depends solely upon the whim of the credit card guy on the other end of the phone.  You are told to STOP paying your credit card bills and to begin sending that money instead to the debt management company.  The company will then hold it in an account while they call your creditors and negotiate better deals for you.  If they are able to get a low payoff on a card, for example, they will pay it off using the funds in your account.”

“Now, the problem lies in that the company doesn’t ONLY withdraw funds out of your account to pay your debtors, but that it also withdraws funds to pay ITSELF for the work it is performing on your behalf.”

My neighbor then asked why is this such a bad thing.  I continued . . .

“First, their fees can quickly escalate and usually are far more than what the customer expects. Second, there are NON-PROFIT companies that perform this service for little to no cost.  Simply search CONSUMER CREDIT COUNSELING and NON-PROFIT in your area. (In MA, it is  Consumer Credit Counseling Service of Southern New England)   Third, you can DO THIS YOURSELF and for FREE.  Just call your debtors and advise that you are in tough financial shape and can’t make payments as scheduled.  Ask for a rate reduction or for a payoff of your whole balance at a discounted rate.  (Ask if they will accept a lump sum payment of half of your balance, for starters.)   Put your negotiation skills to work. If need be, and if it is accurate, tell them you may need to file bankruptcy if you can’t get some help.  Your credit card creditors may be willing to take a portion of the entire debt now rather than have you discharge it all in bankruptcy court and they get nothing.”

Now, in the case of my neighbor’s friend, she ended up owing MORE money than she did before she hired the debt management company for the following reasons: 

a) They were unable to get concessions from the debtors,

b) Their fees for each of the services (calls, letters, emails) were too high

c) They “churned” the account. (Churning is a term often used to describe actions of unscrupulous stockbrokers whom buy and sell client stocks merely to get the per-transaction fee for each action.)  And, because they are paid for each and every action they take, they profit almost every time they touch your file.

d) All of the above.

In summary, there is no easy way out of high balance consumer debt.  If you are fortunate enough to be employed and to be able to meet and maybe even PAY DOWN balances then a renegotiation strategy with creditors may work for you.  However, if you are falling more and more behind every month and see  no way out, it may be time to start looking into bankruptcy options. 

Bankruptcy can wipe out all credit card debt and provide a fresh start.  However, it is not a decision to be made lightly and one must weigh the pros with the cons before arriving at a decision.

Kara O’Donnell, Esq.

Law Office of Kara O’Donnell

Quincy, MA