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Debt Consolidation in Louisiana
(Note: this is for educational purposes only, and although efforts have been made to keep this up to date and correct, there are no guarantees about the accuracy of anything contained below. It should not be construed as legal advice. For legal advice, please consult with an attorney licensed in Louisiana.)
Louisiana residents, particularly after Hurricane Katrina, have had numerous financial problems to deal with. With credit card debt levels at an all-time high, the need for debt consolidation and consumer credit counseling programs is self-evident. That being said, not everyone in Louisiana understands the differences between the kinds of debt management being offered, and even worse, very few know how to differentiate between good and bad debt companies. The purpose of PayingPaul.Com is to educate consumers to help them make an informed decision about what debt path is appropriate for them.
First, one must understand that there two different types of debt consolidation. The oldest form of debt management is known as credit counseling. These debt agencies have been in existence since the 1950s, and many of them are non-profit based. Much of their focus is on financial education and offering budgeting help to consumers. That being said, if your situation permits, you may want to consider enrolling in on of their debt management plans (DMP). If approved for a DMP, a credit counselor will work on your behalf with creditors to lower your interest rates and help you become debt free faster, usually within four to five years. Although the organizations offering these services are non-profit, this is no guarantee that they are legitimate or affordable. There are fees associated with these programs, so be sure to do your research before opting for this solution.
More recently, a new type of debt relief service has emerged - credit card settlement. With this type of debt help plan, a consumer can pay off their debts for less than what they actually owe. Because of this fact, it is generally the quickest way to pay off debt outside of bankruptcy. Although the savings are tempting, this is a risky way to get rid of problem debt. During the course of these programs, one falls delinquent on their payments to their creditors and instead saves money monthly into a separate savings account, which will be used to fund future creditor settlements. Due to the fact that the consumer is considered past due during this time, a number of problems may arise. One, the consumer will experience creditor calls and other collections activities, including charge offs and possibly even lawsuits. Secondly, this will most likely cause your credit score to drop. Due to these drawbacks, debt settlement tends to only a good idea for people experiencing serious debt problems.
Want to learn more about debt consolidation? Submit a form and let PayingPaul.Com match you with a debt specialist for a free, no obligation consultation!
Louisiana Debt Management Laws
Louisiana has regulations in place to protect consumers from unscrupulous debt consolidation companies.
Definition
Under Louisiana law, “debt adjusting”, which is an old-fashioned term for debt consolidation, is outlawed unless done by a not for profit. The law defines “debt adjusting” as “the making of a contract….where the debtor agrees to pay a certain amount of money…and the business agrees to distribute the same among certain specified creditors in accordance with a plan agreed upon.”
Fees
Companies that fit under the Louisiana definition of a debt counselor are required to be licensed with the state and limit their fees to 12% of the total debt included in the plan. (The language of the law later goes on to read that a debt consolidation company may not charge “more than twelve percent of the amount received by it at any one time from or on behalf of that person”). Initial fees cannot exceed $25.
Exemptions
It should be noted that the law does exempt certain institutions and people from its provisions:
-lawyers licensed in Louisiana who engage in “debt adjusting” incidentally while practicing law
-banks and fiduciaries in their regular course of business
-title insurers and abstract companies while doing an escrow business
-judicial officers or others acting under court orders
-non profit organizations
-certified public accountants who engage in “debt adjusting” incidentally while practicing as an accountant
-bona fide trade or mercantile associations in the course of arranging adjustment of debts with business establishments
-employers for their employees
-any person or bank that arranges a debt consolidation loan, who at the authorization of the debtor, acts a “debt adjuster” in the disbursement of the proceeds of the loan, without compensation
For more information about Louisiana laws governing debt consolidation and credit counseling, feel free to follow these links: Louisiana Debt Adjusting Statutes
Other Resources
Filing Bankruptcy in Louisiana
Bankruptcy Laws in Louisiana
Debt Collection in Louisiana
Louisiana residents, particularly after Hurricane Katrina, have had numerous financial problems to deal with. With credit card debt levels at an all-time high, the need for debt consolidation and consumer credit counseling programs is self-evident. That being said, not everyone in Louisiana understands the differences between the kinds of debt management being offered, and even worse, very few know how to differentiate between good and bad debt companies. The purpose of PayingPaul.Com is to educate consumers to help them make an informed decision about what debt path is appropriate for them.
First, one must understand that there two different types of debt consolidation. The oldest form of debt management is known as credit counseling. These debt agencies have been in existence since the 1950s, and many of them are non-profit based. Much of their focus is on financial education and offering budgeting help to consumers. That being said, if your situation permits, you may want to consider enrolling in on of their debt management plans (DMP). If approved for a DMP, a credit counselor will work on your behalf with creditors to lower your interest rates and help you become debt free faster, usually within four to five years. Although the organizations offering these services are non-profit, this is no guarantee that they are legitimate or affordable. There are fees associated with these programs, so be sure to do your research before opting for this solution.
More recently, a new type of debt relief service has emerged - credit card settlement. With this type of debt help plan, a consumer can pay off their debts for less than what they actually owe. Because of this fact, it is generally the quickest way to pay off debt outside of bankruptcy. Although the savings are tempting, this is a risky way to get rid of problem debt. During the course of these programs, one falls delinquent on their payments to their creditors and instead saves money monthly into a separate savings account, which will be used to fund future creditor settlements. Due to the fact that the consumer is considered past due during this time, a number of problems may arise. One, the consumer will experience creditor calls and other collections activities, including charge offs and possibly even lawsuits. Secondly, this will most likely cause your credit score to drop. Due to these drawbacks, debt settlement tends to only a good idea for people experiencing serious debt problems.
Want to learn more about debt consolidation? Submit a form and let PayingPaul.Com match you with a debt specialist for a free, no obligation consultation!
Louisiana Debt Management Laws
Louisiana has regulations in place to protect consumers from unscrupulous debt consolidation companies.
Definition
Under Louisiana law, “debt adjusting”, which is an old-fashioned term for debt consolidation, is outlawed unless done by a not for profit. The law defines “debt adjusting” as “the making of a contract….where the debtor agrees to pay a certain amount of money…and the business agrees to distribute the same among certain specified creditors in accordance with a plan agreed upon.”
Fees
Companies that fit under the Louisiana definition of a debt counselor are required to be licensed with the state and limit their fees to 12% of the total debt included in the plan. (The language of the law later goes on to read that a debt consolidation company may not charge “more than twelve percent of the amount received by it at any one time from or on behalf of that person”). Initial fees cannot exceed $25.
Exemptions
It should be noted that the law does exempt certain institutions and people from its provisions:
-lawyers licensed in Louisiana who engage in “debt adjusting” incidentally while practicing law
-banks and fiduciaries in their regular course of business
-title insurers and abstract companies while doing an escrow business
-judicial officers or others acting under court orders
-non profit organizations
-certified public accountants who engage in “debt adjusting” incidentally while practicing as an accountant
-bona fide trade or mercantile associations in the course of arranging adjustment of debts with business establishments
-employers for their employees
-any person or bank that arranges a debt consolidation loan, who at the authorization of the debtor, acts a “debt adjuster” in the disbursement of the proceeds of the loan, without compensation
For more information about Louisiana laws governing debt consolidation and credit counseling, feel free to follow these links: Louisiana Debt Adjusting Statutes
Other Resources
Filing Bankruptcy in Louisiana
Bankruptcy Laws in Louisiana
Debt Collection in Louisiana