Featured News 2016 Debt Settlement or Chapter 7?

Debt Settlement or Chapter 7?

Have you maxed out your credit cards? Have the minimum payments become so high that you cannot afford them? Perhaps you have not been able to keep up with your minimum payments and the interest and penalties have been tacking on hundreds of dollars to your total balances each month.

How do you plan to pay down your credit card debt? If you're having financial difficulties, you may not have a clue as to when you will be able pay off your credit cards. Now imagine that a company promises to drastically reduce, if not erase your credit card debt for pennies on the dollar. If it sounds too good to be true, it probably is.

Truth About Debt Settlement Companies

According to the Federal Trade Commission (FTC), most debt settlement programs are offered by "for-profit" companies, some of which are scams. Debt settlement involves the debt settlement company negotiating with the debtor's creditors so they agree to accept a lump sum payment that is less than the full amount owed.

With debt settlement, the debtor sets aside a specific amount of money each month in an escrow-like account for 36 months or longer, which is stashed away for paying a settlement that is eventually reached.

Often, debt settlement companies encourage the debtor to stop paying their credit card payments to help "motivate" the creditors to settle.

Be aware, there is no guarantee that a credit card company will settle on a debt. Since debtors are asked or encouraged to stop paying their credit cards, their credit is negatively affected. As the late fees and penalties accrue, the debtor goes even further in the hole. Debtors also continue being contacted by the creditor, and these calls and letters are bothersome.

If you are considering debt settlement, you should speak to a bankruptcy attorney before you make any decisions. With a Chapter 7, a qualified debtor can erase or wipe out 100% of their credit card debt and begin rebuilding their credit as soon as the bankruptcy is discharged.

Related News:

The Wrong Kind of Debt for Chapter 7 Bankruptcy

Even if you are overwhelmed with debt, Chapter 7 bankruptcy may not be the answer. Before you file, you have to assess the kind of debt you have to make sure it will actually be discharged in Chapter ...
Read More »

The Formula for a Speedy Bankruptcy Recovery

Are you about to emerge from bankruptcy? If so, then the best thing that you can do is formulate a plane that will help you to recover from the process quickly and get back on your feet financially. ...
Read More »

Bankruptcy Fraud: How a Simple Mistake Can Have Lifelong Consequences

Struggling with debt can be frustrating and overwhelming, to say the least. Couple that with a federal or state investigator interrogating you and your family in regards to a potential fraud issue, a ...
Read More »