Should I Settle my Debt or File Bankruptcy?

by DeLadurantey Law Office, LLC on December 30, 2014

debt wordsIf the holidays have left you feeling overwhelmed with debt, it is important to consider all of your debt relief options. Two of the most common ways people take control of their finances is through debt settlement or bankruptcy. How do you know which is the better choice for you?

If you have the ability to pay back a portion of the debt you owe, debt settlement may be a viable option for you. Most creditors are willing to agree to a reduced lump sum payment versus being paid nothing at all. In fact, you may be able to settle your debt by paying only a fraction of what you owe. However, there is no guarantee that your creditors will be willing to settle with you and there can be negative tax consequences for all amounts forgiven.

A personal bankruptcy is an effective option for individuals who do not have the ability to pay their debt. Bankruptcy is the most comprehensive means for dealing with all of your creditors and your debt at one time. When you emerge from your case, you will have eliminated most, if not all, of your debt.

The first step in determining which option works best for you is to assess your debt. You should request a copy of your credit report from all three major credit reporting agencies (Equifax, Experian and TransUnion). These reports will give you the best overall picture of who you owe and how much you owe them.

If you are interested in settling with your creditors, you must have sufficient funds to pay at least a portion of what you owe. Most debt settlement plans begin with you making a large lump-sum payment that pays your debt in full or allows you to continue making smaller monthly payments until the settlement amount is reached. You should also be aware that debt settlement could negatively impact your credit score.

If you are interested in filing a bankruptcy case, you will receive immediate protection from your creditors. If you owe a large amount of unsecured debt (credit cards, medical bills, etc.), bankruptcy may be the better option for you. There are no negative tax consequences when you file bankruptcy, but your credit score will be damaged.

There are many factors that should be considered when trying to deal with debt. Let us review your individual situation and help you understand the debt relief options available to you. Contact us to schedule your appointment today.

The “defender of the little guy,” DeLadurantey Law Office, LLC. handles student loan debt and bankruptcy matters (Chapter 7 and Chapter 13) in Milwaukee, South Milwaukee, West Milwaukee, and Milwaukee County, including the municipalities of Bayside, Brown Deer, Cudahy, Fox Point, Franklin, Glendale, Greendale, Greenfield, Hales Corners, Oak Creek, River Hills, Shorewood, St. Francis, Wauwatosa, West Allis, and Whitefish Bay. The firm also can handle your debt negotiations, debt relief, and mortgage loan modifications.   Contact DeLadurantey Law Office, LLC by phone: (414) 377-0518. Like us on Facebook.

 

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