In the American Bar Association Journal last week, I read about a California attorney who has been accused by the state attorney general of operating a “heartless scheme” that takes retainers from thousands of clients while doing little or nothing to help them.
Yes, even lawyers can act like debt settlement companies, many of which take fees and settle no debts
I have no opinion on this particular firm or the law suit, since it has just been filed. However, the state attorney general makes a charge that is familiar for operators of debt settlement companies: “She places clients in an endless loop of requests for duplicate documents,” it says, “that increases her fees and, due to further delays in payments to the IRS, increases clients’ IRS fines and penalties.”
Here’s one of the ads for the firm named in the suit.
Beware claims about tax debt
While we’re talking about debt settlement, beware the national and local companies who boast that they can reduce or even eliminate your tax debt. Often, these companies do more harm that good; under certain circumstances, income taxes are dischargeable in a bankruptcy. You probably won’t hear that from these outfits.
If you have unpaid income taxes as well as other debts you cannot pay, seek bankruptcy counseling from a qualified advisor.