- Whether debt settlement or bankruptcy may be a better option for you.
- The relationship between settling debt and your credit score.
- The difference between what a debt settlement company and a debt settlement attorney can do for you.
Is Debt Settlement A Better Choice Than Filing For Bankruptcy?
Depending on several factors, such as your total amount of debt and income, debt settlement may be a better option for you than bankruptcy. For instance, if you have one or two creditors and owe less than $20,000, it is worthwhile to consult a debt settlement attorney.
Like so many, you may want to avoid filing for bankruptcy for one reason or another. Debt settlement can steer you clear of this. In addition, many people may own a home or other assets that would force them to consider debt settlement over bankruptcy.
What Would Make Me A Good Candidate For Debt Settlement With Your Firm?
A good candidate for debt settlement with our firm is someone that owes more than $7,000 and has collection calls from one or more creditors.
Will Settling My Debts Impact My Credit Score?
Settling debts will impact your credit score, but much less than the alternative of doing nothing. Debt settlement can result in a notation of paid and settled on your credit report and remain there for seven years.
If you do nothing, you will end up with a judgment that will impact your credit for up to 12 years or longer unless revoked.
Can I Settle My Credit Card Debts And Other Debts On My Own?
You can settle debt on your own, but you expose yourself to many risks, such as:
- Ending up with a roadblock;
- Ending up with a higher amount on your settlement;
- Ending up with a judgment against you, along with the settlement.
Debt settlement attorneys can negotiate for a dismissal of the lawsuit, unlike individuals who tend to agree to consent judgments. A consent judgment is an agreement for judgment and repayment of debt.
Suppose you do not know how to navigate the waters of debt collection law, which is the case for most people. You could easily end up with an unfavorable result compared to if you had a debt settlement attorney working for you, such as a balance to be paid in full versus a lower amount due and a lower repayment.
What Are Debt Settlement Companies And How Do They Work?
Debt settlement companies offer an alternative to bankruptcy, often framing their service as financial relief via debt settlement. Unfortunately, the reality is the polar opposite, more often than not.
Debt settlement companies typically charge you fees prior to settling your debt. You would most likely have a contract with them to pay a set monthly amount over 12 to 16 months to settle your debt. It is imperative you research a debt settlement company before getting to this point, however.
There are some legitimate debt settlement companies in the U.S., but many dishonest companies exist. While most states require them to be licensed and follow industry regulations to protect consumers and their money, they cannot guarantee that a creditor will agree to a debt settlement.
We also highly recommend you look at the cost they quote you. Debt settlement companies typically charge a 15% to 25% fee to tackle your debt. This fee could be a percentage of your debt’s original amount or a flat fee to resolve your debt. Debt settlement companies also require you to put money into a special savings account for 24 months or longer before the debt is ultimately settled.
Another thing you need to consider is the timetable – how long will it take for the debt settlement company to start to reach out to your creditors? Unfortunately, many individuals end up with multiple additional lawsuits and potential judgments when working with a debt settlement company because they are not speedy.
Be aware of the potential pitfalls when working with a debt settlement company. Some are known to show difficulty responding to phone calls and emails. They may not be very responsive to your contact with their company after you sign up with them.
Perhaps most significant, settling debts could entail tax implications that a debt settlement company may conveniently forget to make clear to you.
For more information on Debt Settlement, Bankruptcy & Debt Settlement Companies, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (240) 539-9393 today.
Call Now For A Complimentary Case Evaluation
Former Chapter 7 Trustee