Debt Settlement as a Solution to Financial 911
Sometimes you don’t need to file bankruptcy. What you need is not a fresh start, but a hired gun to call up your creditors and bring them to the negotiating table. Let a skilled debt settlement attorney help you with debt settlement.
While filing bankruptcy can be effective for many people, it should be a last resort. It’s understandable, then, that many people would want to avoid bankruptcy, and try a different solution first. One way to do this is to negotiate your debts, and settle them, often for less than the full amount.
Settlement Takes Money
It may sound obvious, but it takes money to settle a debt. The problem is not everyone has thousands of dollars at their disposal that is available to use for paying their debts. However, if you’re diligent and fortunate enough to have saved some money, have a retirement account you can touch (and want to), or home equity you can access, then you’ve given the Debt Settlement Attorney something to work with.
What about Payments?
Generally, by the time debts have been in default, the creditors that owns them are no longer willing to accept payments. The payment option didn’t work out well, and so they’re skittish. Plus, a lump sum provides incentive for the creditor to provide a discount on the debt. This involves risk management, future value and present value.
What Kind of Savings Can I Expect in Debt Settlement
So if you’re still reading and have access to funds for settlement, then the next question is, what kind of discount are we talking here?
The answer is, like most things, “it depends.”
If it’s been late only a few months, generally you can get a deeper discount. If the debt has gone to judgment, generally you will get very little savings. But in both cases, there’s still a benefit to you since the case is over, you have peace of mind, and it’s no longer growing with interest, late fees, and penalties.
And of course, every creditor and collection agency is different. Some will be more flexible than others. But to those who are open to it, money talks. And for one lumpsum payment, they’ll be usually willing to cut the balance more. I’m not saying you’ll get half-off, but even if you got 80-cents-on-the-dollar, that would still provide a huge benefit.
Most people would be thrilled to have a magic credit card that provides them 20% off all goods and services they put on it.
Any other Downsides
Firstly, you’re paying a lump sum debt settlement payment. But there is another potential downside associated with settlement: debt forgiveness.
So, secondly, while we don’t pretend to be tax experts, it’s generally understood that debt forgiveness can result in taxable income and a 1099. That is, you may need to pay taxes on any debt amount you’re forgiven. Talk to your tax advisor on what that would look like to you.
Thirdly, if you’re going to settle one debt, be prepared to settle them all. It’s disappointing to liquidate thousands of dollars to settle a debt, think you’re in the clear, and then have another one or two start collecting, then take you to court. Capital One is not going to care that you’re tapped out because you gave it all to Discover.
They want their money too and if you’re out of settlement money, they could push you to bankruptcy protection. And then you regret and may wish you had the thousands back you gave the first one. Or maybe you’ll have more money when the next credit card comes knocking, but that’s the chance you’re taking.
Summing up Debt Settlement with an Attorney
- You’ll need a lump sum of money
- You may get a savings on the full balance
- Avoid bankruptcy
- Potential tax consquences
- If you’re going to settle one, settle all
Why You Should Retain Us for Debt Settlement Attorney
There are many reasons we’re the ones to negotiate your debts. We get results. First, we’re skilled negotiators, and were instrumental in ending years-long bitter litigation to find common ground where two newspapers created a new joint venture. Second, who better than a bankruptcy attorney to be on the other side of the phone settling a debt. It provides leverage that you’re willing to file bankruptcy if they reject our offer.
So the something on the table with a bankruptcy lawyer is better than the nothing they may get if we file Chapter 7 bankruptcy. Finally, a lawyer is a professional who is emotionally detached from your debt. It’s not personal, and because of that we’re able to see the battlefield clearly not clouded by the fog of emotions. This can result in reaching a better debt settlement result than if done by the person attached to the debt.