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Debt Settlement and Debt Negotiation: Big Promises, Bigger Risks

Many seniors have unsecured debt – either from credit cards, medical expenses, or personal loans.  Americans in retirement now are more likely to have debt and to have high levels of debt than past generations.  When debt gets overwhelming, it can be hard to know what to do.  This is where debt settlement and debt negotiation companies make very tempting offers.

How Debt Settlement Works

These companies will often promise to help you get out of debt by settling the debts quickly.  However, they often charge steep fees for these services, and the process is anything but quick.  Debt settlement or negotiation programs are generally for-profit companies.  Your participation in the program may put you into more debt, and you may not get the hoped-for results.

There are variations in how they work.  Typically, the debt settlement company tells you to stop paying your creditors and to make monthly payments to the debt settlement company.  The company will hold your funds in escrow—a type of bank account—and will take extra fees for administering the escrow account. After accumulating enough funds to make an offer for a lump sum payment, the company is supposed to contact your creditors to negotiate a settlement for less than what you owe. Sometimes they are successful, but there are many drawbacks. For example, these companies have no special pull or influence with your creditors.  They cannot guarantee any better results than you could get yourself.  Meanwhile, your interest and fees on the debt can continue to accumulate, while your credit score continues to drop—exactly the same as it would if you were not involved with the program.

While some people find it helpful to have the monthly payment deducted so they are not temped to spend it, you will be paying to have your money held in escrow by a third party instead of letting it accumulate in your own bank account.  And there is always the risk that you will entrust your funds to a company that intends to defraud you.

Alternative Options to Using a Debt Negotiator

What debt negotiation or settlement companies do not tell you is that negotiating to settle debt is something that you can do yourself, or get help with from a local nonprofit.  Additionally, if you are low-income and without significant assets, you may be judgment proof.  Judgment proof means your income or assets are protected, and can’t be seized by creditors to satisfy money judgments.

Be sure to look into all your options before choosing debt settlement or negotiation.

Consider working with a non-profit consumer credit counseling service, rather than a for-profit entity. If you do choose to go with a debt settlement company, do your research and read the fine print in your contract.  Be sure that you understand your rights and obligations and what to expect.

Red Flags:

  • The company wants fees upfront (in addition to the fee for servicing the escrow account) before settling debt.
  • It promises it can settle your debt for a specific percentage of what you owe.
  • The company tells you to stop communicating with creditors.
  • It promises it can stop lawsuits by creditors.

If you are a senior over 60 in Contra Costa looking for help with debt issues, contact Contra Costa Senior Legal Services for assistance.  For more information about the debt collections process, check out our Consumer Debt Collections Overview.

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What is a Durable Power of Attorney?

If you slipped and hit your head, and ended up in the hospital in a coma, who would manage your finances?  Does that person have the legal authority to access your accounts, pay your bills, and handle your property?  If you are a senior, you should know the answer to these questions.  Anyone can become incapacitated, and planning for this can save you and your family a lot of time, money, and headache.  A Durable Power of Attorney is one of the key documents to plan for incapacity. (more…)

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New Law Will Make SSI Recipients Eligible for CalFresh in 2019

Beginning in summer of 2019, seniors in California who receive Social Security Income (SSI)/State Supplemental Payment (SSP) benefits will also be able to apply for CalFresh food benefits.  California had been the only state in the nation to exclude SSI/SSP recipients from receiving food stamps.  This new law will help reduce hunger and poverty among California’s seniors.

The CalFresh food program is California’s largest social service program to help relieve hunger and malnutrition in the state.  Over 4 million California residents receive an average of $130 per month to purchase food.  With this change in the law, eligible seniors will be able to receive a monthly CalFresh food benefit to help meet their basic needs.  Importantly, the receipt of CalFresh benefits will not count as income or resources for the purposes of calculating SSI/SSP benefits. (more…)

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As California’s Population Ages, Resources Grow Thin

Millions of seniors are struggling to meet their basic needs.  From health care to housing to caregiving, there are not enough resources to go around, according to a new article in the LA Times (   These struggles will only grow as the population of California’s seniors, the fastest-growing population, continues to increase.  In 2016, there were 5.5 million seniors in California.  By 2060, that number is expected to climb to 13.5 million, or 26% of the population (from 14%).  (more…)

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5 Tips For Protecting Yourself From Financial Abuse

Financial abuse costs seniors billions of dollars a year. 

All across the country, seniors are the victims of scams, fraud, and other types of financial abuse.  Seniors are targeted in all kinds of ways.  A scammer on the phone pretends to be law enforcement and says you will be arrested if you do not pay unpaid fines for missing jury duty.  A family member helps themselves your savings account.  An insurance agent convinces you to buy an annuity that ties up your money with no benefit to you.

Luckily, there are ways to protect yourself and your assets from many kinds of financial abuse. (more…)

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What is an Advance Health Care Directive?

You may have heard of an Advance Health Care Directive (AHCD), or you may already have one in place.  The following explains what an Advance Health Care Directive is and why it is important to planning for incapacity.  Incapacity can happen gradually, such as when we near the end of life, or suddenly, such as when we suffer from a stroke or other health crisis.  If not planned for, incapacity can create a myriad of problems. Taking action while you can make sound decisions will help you and your loved ones manage your care in the future. (more…)

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California’s Seniors Suffer Moderate to Severe Rent Burdens

Researchers from the University of California, Los Angeles, Center for Health Policy Research released a study on rent burdens on California’s seniors.  In 2016, more than three-quarters of low-income seniors were either “rent burdened” or “severely rent burdened.”

An individual is “rent burdened” if more than 30% of their income goes to rent and “severely rent burdened” if more than 50% of income goes to rent.  In the Bay Area, around 50% of seniors are severely rent burdened and another 25% are rent burdened.  (more…)

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Announcement: Appointments Available for Low-Income Estate Planning

The JFKU Elder Law Clinic is starting up again. This clinic will provide 9 lucky individuals with free estate planning, including a will, trust, Durable Power of Attorney, and Advance Health Care Directives.  Clinics are on dates listed below and take place in the afternoon.

Income/resource limits for this service: income of $2,500 or less for a single person, $3,500 or less per month for married couples. No significant resources outside of the home. To sign up, call us at (925) 609-7900. (more…)

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How to Get the Security Deposit Refund You Deserve

If you are renting a house or apartment, you most likely paid the landlord a hefty security deposit before moving in. In addition to keeping your rental unit in good condition, there are several things you can do to protect your rights and increase your chances of getting your deposit back.

The first is to exercise your right to have an “initial inspection.” The initial inspection by your landlord happens before you move out. It occurs no more than two weeks before the end of your tenancy. This an important tool to protect yourself from unreasonable or surprise deductions. But, you must tell your landlord that you want to schedule the inspection. You have the right to be present during the inspection. At the end, the landlord must leave you with an itemized statement. This statement must list the conditions or damage that could lead to deductions from your security deposit unless corrected before the end of your tenancy.


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2702 Clayton Rd.
Suite 202

Concord, CA 94519
(925) 609-7900

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Our Mission

The mission of CCSLS is to protect the rights of seniors. By providing legal services, the organization is also able to mediate poverty and improve health outcomes for the population it serves. Lawyers are uniquely qualified to help identify and address legal issues that impede the ability of seniors to remain healthy and independent.