Settlement is one of the most effective choices available to consumers to help them get out of debt. It allows you to get out from under the debt for less than what you owe, while saving your credit from having a bankruptcy filed against it.
Who is a Good Candidate for Debt Settlement?
Debt settlement is a great choice if you have more debt than you can pay off in a 2 – 3 year time frame or are experiencing a financial hardship that has you falling behind (or just about to be) on your monthly payments. The recent economic decline has made debt settlement a good option because so many families are electing to file bankruptcy. Creditors know that if they fail to settle, they could put you into such a bad financial position that you can’t pay your monthly payments and you may decide to declare bankruptcy or simply do nothing. In this case they may get nothing! Therefore, they are usually very willing to settle for a lower amount, given your hardship, than risk getting nothing at all.
Is Debt Settlement a Better Choice Than Bankruptcy?
There really is no “better” or “worse” in this decision. Normally the choice between bankruptcy and debt settlement is a very individual choice that weighs your financial circumstances, your credit situation and your personal beliefs.
Bankruptcy may allow you to eliminate most of your debts quickly, and this is typically referred to as a “Chapter 7 Bankruptcy.” In other cases, you may be required to pay back a percentage of your debts over time. This is typically referred to as a “Chapter 13 Bankruptcy.” Bankruptcy also offers legal protection under the court so that you don’t have to worry about being sued or harassed by creditors while completing the bankruptcy process. While most reputable debt settlement firms will work to assist in minimizing creditor calls and harassment where possible, debt settlement does not provide the guaranteed legal protection that bankruptcy does.
Chapter 7 bankruptcy is not an option for everyone and it has gone through some changes since the bankruptcy reforms of 2005. Unlike the not so distant past, it has become more difficult to qualify for full liquidation (forgiveness) of your unsecured debts. Chapter 13 bankruptcy requires five years of court-ordered payments during which you pay a portion of your debt.
However, as getting all of your options will help you make a more informed decision, speaking to a bankruptcy attorney is be a worthwhile discussion. Since our law firm is a full service debt relief firm, we will discuss the pros and cons of bankruptcy and debt settlement at your consultation with one of our attorneys.
How Do I Know if I am a Candidate for Debt Settlement?
There are a few factors that an attorney can go over with you in more detail. In general, if you can afford to pay back your debts on your own by paying more than the minimum payment every month without hardship, it’s probably best that you do so and do not seek debt relief options like debt settlement or bankruptcy. However, for those in true (or soon to be) financial hardship, debt settlement though a trusted law firm may be a better option.
How Much Does It Cost To Settle My Debt?
Our law firm gets paid based on the results we produce. We normally charge our clients a percentage of the amount of debt we save them and a small up front retainer. Debt settlement fees are also determined by the type of debt we are settling and the difficulty of settlement. When you come into the office for a consultation, an attorney will give you a fee quote tailored to your situation so that you can have a clear idea of the cost to hire our office to settle the debt. You will always be quoted a price before we begin work on the project so that you can make an informed decision about whether you can afford our services.