If you feel like you’re drowning in debt, you’ve probably considered
bankruptcy. While bankruptcy can eliminate certain debts, isn’t
the right solution for everyone.
Advantages and Disadvantages of Debt Settlement
debt settlement allows consumers to alleviate the burden of debt without taking their
case to court. This appeals to many people, especially since the bankruptcy
process can be tedious and overwhelming.
How debt settlement works: In a debt settlement agreement, the debtor agrees to pay a sum of money;
in exchange, the creditor agrees to disregard certain debts.
The biggest benefit to settling your debts is complete and immediate relief
from your financial stress. In many cases, it does not damage your credit
as severely as filing for bankruptcy. However, debt settlement comes with
a number of drawbacks as well.
By law, the written-off debts cannot exceed a certain amount. If they do,
the difference becomes taxable income. In this scenario, you could end
up owning taxes on some of the forgiven debts. Depending on your unique
financial situation, this could be quite expensive.
Unlike bankruptcy, debts settlement does not offer consumers legal protection
from creditor lawsuits. When you file for bankruptcy, creditors are legally
obligated to halt all attempts to collect payment, such as creditor calls
or legal action against you.
If you decide to avoid court, creditors can still sue for your outstanding debts.
How to Make the Right Choice for Your Financial Future
Every case is different. Talking to a lawyer about your financial situation
and goals can help you understand the best path for you: debt settlement
At Wadhwani & Shanfeld, our Los Angeles bankruptcy attorneys can help
you make an informed decision. If bankruptcy is the best solution, we
can guide you through legal process ahead. If your financial situation
lends itself to debt settlement, an attorney from our firm can negotiate
with creditors on your behalf to help you achieve a favorable settlement.
Get our experienced legal team on your side today
by filling out our
quick contact form or
calling our office to schedule an appointment.