Regardless of your debt situation before the COVID-19 pandemic, many families are facing the challenges of mounting debt due to current economic uncertainty. As the credit card and loan balances continue to increase, where should you turn for the financial help that is needed?
Debt settlement might be an effective option to consider. But it is essential that you work with an experienced team to evaluate your unique circumstances before moving forward with debt services. Each situation is different, and our team can help you decide whether debt settlement can be effective, or if you need to file for bankruptcy instead.
Debt Settlement vs. Bankruptcy
You want financial freedom as quickly as possible. At the same time, you need to consider the long-term consequences of the way your debt is handled. Both debt settlements and bankruptcy provide solutions to get you out of debt. But there are advantages and disadvantages to both of these options.
· Debt Settlement: The benefit of debt settlement is that you don’t have to go through a court filing. Instead, private negotiations are used to work with the creditors in finding a solution for paying off the balance. Often, this deal gives you a lump sum for paying the balance in full, with an amount that might be lower than the original sum owed. Sometimes creditors will accept this reduced payment because it is more than they will receive if you file for bankruptcy.
· Bankruptcy: The fastest way out of debt is through bankruptcy. This method can stop your payments and minimize the out-of-pocket expenses that you will need to pay to wipe away the balances. Depending on the type of bankruptcy, your debts will either be erased, or a 3 to 5-year plan is designed to repay the creditors. Even though bankruptcy is a fast solution, it will have a long-term impact on your finances. For example, a bankruptcy stays on your credit report for 7 – 10 years, which could impact your ability to get a home loan or new credit card in the future.
Personal Support for Debt Solutions
If you won’t be able to keep up with the reduced payments from debt settlement, then it might be necessary to file for bankruptcy. Talk to our team at Miles & Hatcher, LLP to learn about your best options. You are invited to call for a free consultation: (909) 481-4080.