Should I Try Debt Settlement Before Bankruptcy?

Posted By Leonard V. Sominsky, ESQ., PC || 17-Dec-2014

For many people, the word "bankruptcy" has a ring of finality to it that they are simply unwilling to accept. The thought of having to give up precious property and start from scratch sounds less than appealing and finding an alternative is often much more welcomed. While there are numerous other options to pursue besides bankruptcy, many are fraught with scams so it is important to be aware of what you're committing yourself to.

While it can be risky, debt settlement is a viable alternative to bankruptcy when executed properly. The following information may help you determine if it is truly the right choice for you.

What is debt settlement?

Debt settlement is essentially just what it sounds like – settling your debts with your creditors for a lower amount than what you currently owe. In most cases, unsecured debt is the only kind that is eligible for settlement. Unsecured debt is anything without collateral attached to it, such as credit card bills, student loans, and medical bills.

Because debt settlement involves negotiating with your creditor, most people choose to let an attorney act as the go-between. The negotiation process begins with you or your attorney offering up a lower amount that you're are able to pay back. A delinquency payment status may cause the creditors to agree.

Two of the biggest drawbacks to debt settlement include the risk factor and the potential of a damaged credit score. Working with a debt settlement company usually doesn't bode well, as many companies will charge extensive fees or promise you things they can't actually do.

If you're considering debt settlement and are unsure of the effect it will have on your finances, speak with a skilled bankruptcy attorney before moving forward. You need to be able to trust that your lawyer is on your side and will protect your rights.

Our firm has nearly 15 years of experience and we consider it an honor to help individuals achieve financial freedom. Whatever you're facing, contact our Phoenix bankruptcy attorney. Scheduling your free consultation is the first step toward lasting peace of mind.

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