What is the Difference Between Filing for Bankruptcy and Debt Settlement?
A person cannot go more than a few days without hearing a radio or TV advertisement stating that some company can consolidate or settle your debts
and negotiate with your lenders to obtain lower interest rates and payment terms. The truth is a lot of these companies are scams who collect your money and do nothing more. If you do decide to hire a company to settle your debts
, you should make sure that the company is reputable and if possible, a law firm. If the debt settlement company does take action and negotiate your debts with your creditors, there is a very high likelihood that you will not be able to make your payments every month, resulting in continued harassment by creditors. The goal of debt settlement companies is to make your payments more affordable; however for many people this is not possible and they get no relief from their debt. If you do find a legitimate company who renegotiates your debts at a lower rate, you will be expected to make a single monthly payment, much like in a chapter 13 bankruptcy
. In a chapter 13 bankruptcy you will only have to make payments for 3-5 years and in many situations discharge whatever you have not paid off at the end of the payment plan. A debt settlement plan does not allow for any sort of discharge prior to you paying off a high percentage of your debt.
Explanation from a Seattle Bankruptcy and Debt Settlement Attorney
Several of our clients have stated that debt consolidation programs have been nothing but a waste of money and they should have filed for bankruptcy in the first place. Here is an actual quote from one of our clients:
“The only time I stopped paying was when I went into the debt consolidation program which was the biggest mistake I ever made… what a joke.”
If you file for a chapter 7 bankruptcy with a bankruptcy lawyer, most, if not all of your debts can be wiped away and you can start fresh. A debt settlement program does not allow you to start fresh and you will continue to be haunted by a mountain of debt in which it is very likely that you will never get out from under the debt. If you have already signed up for a debt settlement plan and have made payments it is very likely that if you decided to file bankruptcy, a bankruptcy trustee would contact the debt settlement company and take back any money you have paid and apply that money to paying off your creditors should you file for bankruptcy. Contact the Symmes Law Group today for a free consultation at 206-682-7975 and let’s discuss your options.
How Can You Sell Your House Before it is Foreclosed On? (5/26/2018) - If you are suffering from financial hardship and facing home foreclosure, you may be able to sell your house before it is foreclosed on in order to avoid having a foreclosure sale report on your credit report and walk away… How Will the New Tax Laws Impact Bankruptcy Filings? (2/23/2018) - The new United States tax laws which could impact future bankruptcy filings was signed into law on January 3, 2018. The new law brings with it many changes that will affect consumers as well as businesses. In general, the biggest… How Do I Get Approved For a Loan Modification? (1/8/2018) - If you have become delinquent on your home mortgage you are probably searching for options for how you can avoid foreclosure, get approved for a loan modification and make your mortgage payments more affordable to keep your home. If you… What Happens After Filing For Bankruptcy? (11/19/2017) - If you are considering filing for bankruptcy, you likely want to know what exactly happens once you do so. However if you want to know if filing for bankruptcy is a good idea and whether chapter 7 or chapter 13… How Do Mortgage Payments Work? (10/18/2017) - Figuring out what you owe on your mortgage can be very difficult, especially when you likely have to go in circles with your loan servicer to get a competent person to answer the phone with regard to how your mortgage… Can a Business File Bankruptcy? (7/30/2017) - Yes a business can file for bankruptcy, but a business owner will need to determine whether it will make sense to file a business bankruptcy, or deal with the debts on a personal level through a personal bankruptcy or debt… Who is National Collegiate Student Loan Trust? (7/2/2017) - It’s not surprising that you have never heard of National Collegiate Student Loan Trust, in fact you are probably reading this article because you have no idea who they are or why they have filed a lawsuit against you. National… How to Manage Old Debt After Recent Supreme Court Ruling (5/29/2017) - It’s easier for old debt to haunt American consumers seeking refuge in bankruptcy, thanks to a recent ruling by the Supreme Court in Midland Funding, LLC v. Johnson (2017). I have blogged before about Midland Funding and their reputation for…