How Can Lawyers Help With My Debt Settlement?
Lawyers Can Help You With Debt Settlement
When you have overwhelming debt, it can feel like there will never be an end to it. This is a serious problem that will not typically go away on its own, especially if the creditors aren’t getting paid. In this case, debt settlement can be an excellent resolution that allows you to get out from under your debt and start fresh.
Can a lawyer help with debt settlement? In few cases, you will need a lawyer if you want to get debt relief. An experienced bankruptcy attorney in Portland, Oregon, can help you reach a debt settlement plan with your creditors.
But before going any further, you must understand why a debt settlement is needed, how it works, and why you should consider it.
What is debt settlement?
Debt settlement is an arrangement between a consumer and a creditor in which the consumer pays the creditor less than the amount owed. The debt settlement program typically involves negotiation with the creditor’s debt collector.
Why should you consider debt settlement?
Though bankruptcy is a very common form of debt relief, it is not the only one. At Portland Bankruptcy Attorneys, our lawyers are committed to developing a unique solution for each client.
We recognize that everyone’s financial position is unique and that each person may approach debt differently based on various variables. If bankruptcy is not your choice, debt settlement may be a more viable choice.
How Debt Settlement Works
Debt settlement is a procedure in which debtors and creditors agree. Typically, the borrower is represented by a legal advocate to ensure the borrower’s best interests are protected.
These discussions are often conducted outside of court and may result in the borrower paying less than initially due. Settlement alternatives are often more attractive to debt collectors than bankrupt.
Additionally, since our company focuses only on bankruptcy matters, we understand how to resolve debts in your favor.
Individuals who may benefit from debt settlement include the following:
- Those who are unable to file for bankruptcy under Chapter 7 or Chapter 13 or who have already filed and are no longer eligible
- Individuals who earn a lot of money
- Individuals with a sizeable financial wealth
- Those who oppose bankruptcy on moral or religious grounds
Bankruptcy vs. Debt Settlement
Debt settlement and bankruptcy are answers to the same issue – how to get out of debt the quickest way possible?— However, they each have their own set of benefits and drawbacks, making it difficult to choose the best one.
If you have so many bills or debts that you can’t fathom repaying them, it’s necessary to weigh both alternatives to rehabilitate your credit and financial well-being.
While bankruptcy may be the quickest way out of debt, the long-term consequences for your creditworthiness are severe. A bankruptcy will appear on your credit record for seven to ten years, significantly impeding your ability to get a loan, obtain a credit card, or purchase a house.
Unlike bankruptcy, debt settlement does not need a court filing and is often done without the assistance of a lawyer or financial counselor.
A debt settlement is an agreement reached with creditors in which you agree to pay less than the whole amount due, often in the form of a lump-sum payment.
The Benefits of Debt Settlement
- Access to free credit counseling that may assist you in developing and negotiating a debt settlement plan
- Pay a portion of your debt to become debt-free
- Negotiate with creditors via a debt settlement firm to avoid the time and cost associated with bankruptcy.
The Drawbacks of Debt Settlement:
- There is no assurance that creditors will deal with you.
- Stopping payments to demonstrate to creditors that you are serious about not paying may result in collections and legal proceedings to garnish your income, further harming your credit as your debt grows.
- When you stop making payments to save for a “lump-sum” offer, the late fees and interest incurred will raise the amount of your debt.
- If you settle a debt, the forgiven amount will be treated as income by state and federal tax authorities, and you will be required to pay taxes on it.
Bankruptcy’s Advantages and Disadvantages
The Benefits of Chapter 7 Bankruptcy
- It eliminates the majority of debts and provides a financial new start
- Notifies the filer that they are not required to pay taxes on outstanding debts
- Creditors are prevented from pursuing collections
- This may occur in 6-8 months.
Drawbacks of Chapter 7
- it may affect your credit report for ten years
- Certain states permit the seizure and sale of a person’s house and other property. You should check your state’s exemptions.
- Requires you to wait eight years before filing another Chapter 7 petition.
Chapter 13 Bankruptcy Benefits
- Protects your property, Chapter 13 Bankruptcy Benefits: Protects your property, including your home and automobile, from seizure and repossession to satisfy debts
- You will get a discharge of debt after you have made all necessary payments.
- You are not obliged to pay taxes on debt that has been forgiven.
- You must wait two years before filing again — six years less than under Chapter 7.
Chapter 13’s Drawbacks
- Requires you to adhere to a court-ordered payment plan lasting between three and five years
- It lowers your credit score for years, making it more challenging to borrow money or get credit.
When Should Debt Settlement or Bankruptcy Be Considered?
If your monthly loan payments, which do not include your mortgage or rent, surpass 20% of your income, you have a serious debt issue.
The severity of the issue, as well as your capacity and desire to overcome it, will dictate whether a debt settlement plan or bankruptcy is the preferable course of action.
Consider the following situations in which debt settlement may be the preferable method of debt relief:
- You are capable and willing to arrange a settlement agreement with creditors or debt collectors that you can afford and adhere to.
- In return for your promise to make a lump-sum payment, your creditors will agree to decrease your debt load significantly.
- Your income is steady enough that you can continue paying your mortgage or rent, as well as other necessary obligations, in addition to the debt settlement payments, while still saving money for unexpected needs.
The following are some situations in which bankruptcy is the preferable course of action:
- All other debt-relief alternatives have been explored or judged inadequate, making bankruptcy a “last resort.”
- You are in threat or in danger of losing your home to foreclosure, but Chapter 13 bankruptcy may help you make up on missed payments.
- Making debt payments would need a withdrawal from your emergency or retirement funds.
- You are unable to make any debt payments without turning to payday loans with high interest rates.
- You’ve been laid off and are unable to make debt settlement payments.
- Any effort to pay off debt will take longer than five years.
How can an experienced bankruptcy attorney help?
Bankruptcy attorneys have been through it and have the direct knowledge necessary to assist people in debt. Additionally, a bankruptcy attorney may help you with the following:
- Consider all of your alternatives – there is no one-size-fits-all approach to debt repayment. Having a bankruptcy lawyer on your side enables you to tailor your experience in reducing your debt as effectively as possible.
- If you are charged – with a bankruptcy attorney on your side, you will be protected if you are summoned to court to resolve your debt.
- Avoid bankruptcy – by working off your debt rather than declaring bankruptcy, you’re safeguarding yourself from future credit needs. By avoiding bankruptcy, you make yourself more attractive to potential creditors.
What to Expect from a Qualified Attorney in Portland
A qualified bankruptcy attorney is someone you can trust when it comes to debt settlement and filing for bankruptcy. You must be able to put your faith in your attorney. The lawyer you hire should be someone you can sit down with and discuss your problems and concerns.
In Portland Bankruptcy Attorneys, our lawyers are experienced at guiding you through the process of avoiding bankruptcy and reducing debt.
Got debt problems? Consult a reliable bankruptcy attorney today!
To summarize, I hope this helps to clarify everything you need to know about debt settlement agreements. I also hope that you understand that there are reasons why it might be the best option for you!
Your options depend on your financial situation and your needs. You may choose to go with a debt settlement or bankruptcy, but you should at least consider both cases. If you’re savvy enough to read my blog (or someone shared it with you), then you’d surely take action – one way or another!
Whether you need help with debt negotiation or bankruptcy, we’ve got your back. Our experienced Portland bankruptcy attorneys will talk with clarity about your options in a free consultation. We don’t believe in misleading words or manipulation. Our Portland bankruptcy law firm educates clients when dealing with collections, harassing creditors, and bankruptcy.
Our Oregon Attorneys are here to help!