Despite popular belief, debt settlement is not a great alternative to filing for bankruptcy. It won’t give you the relief you are seeking, due to increased enforcement and regulation. Debt settlement is not consumer-friendly, unfortunately, as there are a number of long-term consequences to settling one’s debt. In fact, there are a number of hidden effects to settling one’s debt, such as tax bills on the forgiven debt, high interest rates, and extremely low credit scores.
The following are more comprehensive reasons why debt settlements are a bad alternative to filing for bankruptcy:
- Negotiations can be extremely drawn-out, as they can extend to up to 3-4 years. This means there is a risk of being sued over one’s debts.
- Oftentimes, these debts are only settled for 45-50% of the current balance, including late fees and interest. This means this forgiven debt is now taxable as income once reported to the IRS.
If you can afford to pay your bills, debt settlement and bankruptcy are not for you. However, when your debt is unmanageable, or if you refuse to file for Chapter 7 bankruptcy, debt settlement may work for you. As you can imagine, every situation is unique, which is why it is best to consult with a legal team before making any permanent financial moves.
Contact Our Experienced & Reliable Mesa Bankruptcy Lawyers Today
Are you in a tough financial situation and considering filing for bankruptcy? If so, look no further than the Law Offices of Campbell & Coombs P.C. for a results-driven legal team with the skill and tenacity necessary to advocate on your behalf. Our Mesa bankruptcy attorneys will do everything in our power to ensure your financial situation is resolved as successfully as possible, as finding a comprehensive and capable solution is our goal.
To reach a member of our team, you can schedule a free, initial consultation with a member of our team by calling (480) 568-2333.