According to an article in the Dallas Morning News, Debt Relief USA Inc., filed for Chapter 11 bankruptcy this week and has ceased all operations. That's bad new for debtors who were working with this company because they may not get all of their money back.
The article said:
"Debt Relief USA anticipates sending written instructions to its customers, most former customers, creditors and known potential creditors with instructions on any steps you need to take to protect your interests," the company said on its Web site, www.drusabankruptcy.com... The bankruptcy filing won't affect any debt settlements the company has reached with a client's creditors, he said. On client deposits at Debt Relief, Armstrong said, "Our intention is to refund them as much as possible, but it's subject to bankruptcy court approval."
This company has $4.65 million in assets and $5 million in liabilities, a significant shortfall. Will debtors who trusted this company get their money back? Well, nothing is for sure; but it's guaranteed that priority debts such as taxes will get paid first before non-priority debtors receive a dime.
Customers who gave the debt settlement company their money in hopes that they would pay creditors on their behalf will be considered non-priority creditors by the bankruptcy court. But it is an incident such as this that reminds us why it is so important to move cautiously with debt settlement firms.
Now that this company has filed bankruptcy a customer who has made deposits with them will end up embroiled in their bankruptcy while their debts pile up. It is a real possibility that debtors who made deposits with this bankrupt company may not receive any money back from them.
To avoid being in this type of situation, it's important to thoroughly research and vet any debt settlement or debt consolidation company before you part with your hard earned cash. See our blog entitled " Be Wary Of Debt Consolidation Scams " and make sure you check out the financial health of a company before you do business with them. In these times where many companies are filing bankruptcy and closing shop, you can never be too careful.
If you have found yourself entangled in a deeper financial troubles because of a debt settlement firm and cannot pay your debts you may need to file bankruptcy. Contact a Dallas- Fort Worth bankruptcy attorney so that you can receive legal advice about how bankruptcy can help you.