How can I get debt relief?
Here’s some good news. Let’s say you have debt, but it’s not overwhelming enough to make you want to file bankruptcy. Maybe you’ve already filed bankruptcy in the recent past and are not allowed to do so again for a while.
Debt relief programs are advertised as a way out, but the truth is rather uncomfortable – they often ruin credit scores and get customers sued.
Before you sign up, speak to a qualified attorney. Our free consultation can save you some grief.
Read on for more information.
How does Debt Settlement Work?
Debt settlement is an informal process where a borrower (or their representative) negotiates the outstanding debt down to less than what is owed.
Typically, the borrower then agrees to make a lump sum payment to the creditor.
Can national debt settlement companies help me?
Usually not. Many borrowers are misled into signing up for debt relief programs instead of speaking to a qualified attorney.
The harsh truth is that these companies and their programs cannot do anything that the borrower could not have done themselves, e.g., speaking to their credit card company to lower the debt.
What else should I know about debt settlement companies?
Many will instruct borrowers to simply miss their debt payments and ignore the creditors, often for months on end. This is from a misguided belief that the borrower must first fall behind and then stay behind on payments, in order to negotiate debt. In the meantime, these companies will instruct the borrower to first grant access to their own bank accounts or to make payments to the company’s account until enough is saved to pay their fees and send offers to creditors. By law, these companies are not allowed to take fees until after they have helped resolve at least one debt. Not surprisingly, many companies were caught taking fees beforehand: https://files.consumerfinance.gov/f/documents/cfpb_ram-payment-llc-et-al_consent-order_2022-05.pdf
Should I consult with an Attorney?
Yes. As a law firm, we strongly advise speaking to a qualified attorney about your debt. We have decades of legal experience and can best serve your needs be it through litigation, settlement, or even filing for bankruptcy protection. Debt settlement companies cannot.
What does an attorney do that a debt settlement company does not?
A qualified attorney can outperform a debt-settlement company because the attorney is licensed to practice law and can utilize legal expertise in negotiations and structuring of debt settlements. Even if a borrower is not far behind on debt payments, the attorney can begin the settlement process right away and minimize harm to your credit score. As discussed earlier, debt settlement companies do not begin to negotiate until after you’ve built up enough savings to repay some debt and their fees. By then, your credit score has already been shattered.
Whether creditors have violated the law (e.g., Truth in Lending Act, Fair Debt Collection Practices Act, etc.), refuse to be reasonable, or both, a qualified attorney can leverage the bankruptcy rules or even commence litigation to get you a favorable resolution. Debt settlement companies cannot.
Only a qualified attorney can advise you on the best pathway to debt resolution for your circumstances.
Call the Law Offices of Lee M. Perlman at 856-751-4224 to request a consultation about how bankruptcy or other debt resolution services might help you.
What can speaking to a qualified attorney save me from?
A qualified attorney will never advise to ignore payments and creditors. Your credit score will plunge in that time as the interest and fees increase. You will be sued thereafter. A qualified attorney will also not mislead you into believing that handing over cash to a settlement company will help satisfy your creditors. Borrowers frequently drop out of such programs because they can no longer afford it.
Even if you were to see some progress in saving and settling debt one by one, we assure you that remaining creditors will not sit back and wait their turn. The harsh truth is that each creditor will demand priority and even sue you for it. The settlement company will then abandon you after having taken its fees, of course.
You’ll then end up in an attorney’s office. How helpful the attorney can provide depends on how early you reach out.
Call the Law Offices of Lee M. Perlman at 856-751-4224 to request a consultation about how bankruptcy or other debt resolution services might help you.
Can Debt Settlement Hurt My Credit Score?
Yes. Your credit score can suffer in 2 ways. The first is when you follow the debt settlement company’s instructions to save, miss payments, and ignore creditors. Your credit score only gets worse the longer it takes to finally settle with each creditor.
The second way for your credit score to suffer is after a successful debt settlement because the debt will be reported as “settled” instead of “paid in full,” to the credit bureaus. This is a negative mark and can remain on your credit report for up to 7 years.
But, keep in mind, a qualified attorney will be best positioned to weigh the pros and cons of debt settlement vs. bankruptcy for your personal circumstances. Each borrower has unique circumstances and would benefit from a personalized approach.
How Reliable is Debt Settlement?
It varies based upon each borrower’s circumstances and their type of debt. Borrowers have mixed results when they attempt to settle debt without an attorney.
In the case of medical debt, some borrowers have experienced modest success in directly reaching out to their creditors and negotiating the bill down to an affordable amount.
Borrowers see far less success when dealing with credit card companies or other creditors. Sometimes creditors even refuse to engage in settlement discussions with borrowers. That all changes when you retain the services of a qualified attorney.
Does Debt Settlement have Tax Implications?
Yes. The IRS will typically treat forgiven debt as taxable income. That means the borrower will likely have to pay a tax bill.
How Soon Should I Speak to an Attorney about Debt Settlement?
As soon as possible. Remember, attorneys do not have to wait until you are in default, nor will they, to begin working for you.
Even if you foresee a change in income or other life circumstances, our law firm is well equipped to tackle the problems that can arise from debt. Whether or not personal bankruptcy or debt settlement is a better option will also be evaluated by our qualified attorneys.
Can I even afford to speak to an attorney?
Our consultations are always free of charge. We offer transparent pricing and flexible payment plans.
The sooner you reach out, the better positioned we can be to advocate for you and get your life back on track.
Call the Law Offices of Lee M. Perlman at 856-751-4224 to request a consultation about how bankruptcy or other debt resolution services might help you.