What is Debt Settlement, How Does it Work, and is it Right for my Financial Future?
Debt settlement is one alternative to filing for consumer bankruptcy, and it is a debt relief option that should be considered by any Cleveland bankruptcy attorney and discussed with clients to evaluate the pros and cons of this decision.
Creditors will try to take every penny that you have, they don’t care that you are having financial problems or that you still need to eat, pay essential bills, and survive. You need a legal professional who will fight for you and your financial recovery, negotiating a debt settlement that benefits you!
How Does Debt Settlement Work?
It is important to compare the pros and cons of debt settlement, and determine whether this is a better choice than declaring bankruptcy under chapter 7. The Cleveland bankruptcy lawyer representing you will negotiate with your creditors on your behalf. A lump sum payment, usually far less than the actual debt owed, is negotiated to settle the debt.
This method is often used for credit card debt, medical bills, and other unsecured debt. If you are facing foreclosure or repossession for secured debt then the creditor is probably not going to settle for pennies on the dollar, they will just take the property used to secure the debt and sell it.
In order to get good results with debt settlement you need a skilled and experienced Cleveland bankruptcy attorney and debt specialist to negotiate for you. These negotiations take time, and creditors usually do not offer you the same settlement terms that they will negotiate with a debt relief and bankruptcy lawyer.
Is Debt Settlement Better Than a Consumer Bankruptcy?
The answer to this question depends on your specific financial situation. Some factors that need to be considered include:
- Whether the debt is unsecured, such as medical bills or credit card debt, or if property is used to secure the debt, such as vehicle loans and mortgages.
- Whether you are currently facing foreclosure or repossession.
- Whether you have a regular income, and the amount of this income.
- The total amount of debts that you owe
- If you are facing wage garnishment, bank levies, or other creditor actions
Debt settlement can take a considerable amount of time, and each creditor must be negotiated with for the debt owed to that specific individual or entity. A chapter 7 bankruptcy using liquidation or a chapter 13 bankruptcy that involves debt and financial reorganization may offer benefits that may not be available with debt settlement.
Creditors do not have to work with you to settle your debt, and many may not even start negotiations especially if the debt is secured. A chapter 7 bankruptcy or chapter 13 bankruptcy involves the automatic stay, preventing creditors from trying to collect on any debt until the bankruptcy court can review your income, debts, and other financial details.
You Need an Experienced Cleveland Bankruptcy Lawyer Looking Out for You!
Creditors are simply out to get every penny that they can from you. They don’t care if you lost your job because of COVID-19, if you are facing illness and mounting medical bills, or even if you have enough of your pay left to eat during the week. They just want money, and they will hound you constantly if you can’t pay.
A consumer bankruptcy offers the automatic stay along with other benefits, but it is also a matter of public record and reflects in your credit scores and credit reports. Debt settlement is usually private and is not listed in public or court records. Some employers run credit checks, and in some circumstances a listed bankruptcy could have a negative impact on certain job classifications.
Whether you decide on debt settlement or you use a chapter 7 or chapter 13 filing instead you need a Cleveland bankruptcy attorney and debt specialist on your side. Your creditors will have legal representation to look out for their interests, you need someone looking out for your interests as well. Someone like Susan M. Gray, an experienced debt relief specialist who knows how to negotiate debt settlements as well as handling consumer bankruptcy!
Deb Hipp “Understanding debt settlement: Is it worth it?”. CreditKarma.com https://www.creditkarma.com/advice/i/debt-settlement . Accessed 21 July 2020.
Amy Fontinelle “Debt Settlement: Cheapest Way to Get Out of Debt?” Investopedia.com https://www.investopedia.com/personal-finance/debt-settlement-cheapest-way-get-out-debt/ . Accessed 21 July 2020.