SHOULD I SETTLE MY DEBT OR FILE BANKRUPTCY?

When we meet with clients to discuss their debts, they are often surprised when we recommend debt settlement rather than bankruptcy. They assume that as bankruptcy attorneys, we always recommend bankruptcy. Our goal is to develop a specific and unique plan of action for each client. Sometimes bankruptcy is not the best choice.

There are many reasons why you should choose debt settlement over bankruptcy. Some of these are:

The total debt is relatively low. The costs and fees to settle the debt may be less or equal to the costs and fees of filing bankruptcy;

There may be only one or two accounts that need attention. If all other debts are under control or in good standing, it makes more sense to attempt to settle the delinquent accounts;

Your income is too high or your property too valuable to file Chapter 7, and you do not want to be in Chapter 13 bankruptcy for up to five years.

You have a high security clearance or a position at work where filing bankruptcy may cause problems;

You are about to make a major purchase, such as a home or car, where filing bankruptcy may affect your financing.

You have an excellent credit score. Although we have a credit rebuilding program that can get your score back up, there is a bigger initial drop when bankruptcy is filed vs. debt settlement for people with high credit scores.

Of course, debt settlement has its own problems. Creditors may not agree to settle on favorable terms, you may have to pay a large lump sum payment or monthly payments for years, your credit score may not improve as quickly, and you may have to pay taxes on the money you saved in the settlement.

Each case is different. That is why we review every case and weigh the pros and cons of bankruptcy vs. debt settlement for every client that walks through our door.