Debt problems can cause significant stress. In some cases, dealing with debts can cause problems in your marriage and health issues. Some debt problems are resolved without the need for outside assistance. However, there are times in which a person needs assistance from the bankruptcy system to resolve a debt problem. Our Scottsdale attorneys for debt problems review your situation and offer advice on debt solution options that can help you get rid of debts you cannot afford.
What Are Common Debt Relief Options?
Some of the most common ways to resolve problems with debt are:
Filing for Bankruptcy Relief
Filing for bankruptcy relief can be an affordable, effective way to deal with your debt problem. A bankruptcy discharge wipes out your legal responsibility for discharged debts. Through a Chapter 7 bankruptcy case or a Chapter 13 bankruptcy case, you can get rid of debts and get a fresh start. You can also protect your property using bankruptcy exemptions, stop foreclosure, prevent repossessions, and avoid wage garnishments.
However, deciding to file bankruptcy in Scottsdale can be a difficult decision. There are many factors to consider. Before filing bankruptcy, talk to an experienced bankruptcy attorney in Scottsdale to learn more about the bankruptcy system and whether filing bankruptcy is right for you.
Some people prefer to negotiate directly with their creditors to settle their debts. Debt settlement involves negotiating a lump sum payment with a creditor to satisfy the debt in full. The percentage of the payment depends on how willing the creditor is to resolve the debt.
However, debt settlement has a few drawbacks. Creditors are not forced to work with you as they are in a bankruptcy case. Also, you need an abundant source of money for lump-sum payments. Borrowing against your home or from your retirement account may not be the best way to get out of debt.
Also, the portion of the debts that are forgiven is reported as income, which could result in a significant tax debt the following year.
Debt Consolidation Loans
Debt consolidation loans can result in one monthly payment that is lower than all other debt payments combined. A loan may also allow you to lower the interest rate on the debt that you owe.
The major disadvantage of a debt consolidation loan is that lenders usually require collateral for the loan. You are risking your home, car, and other assets to pay off debts that could be discharged in bankruptcy.
Debt Consolidation Company
Working with a debt consolidation company can help you pay off debts by combining your debts into one monthly payment to the debt consolidation company. The company works with your creditors to lower your monthly payments to make the plan affordable.
However, there could be a few problems with this debt relief option. The debt consolidation company typically charges a fee for its services, which could be substantial. Your creditors are not required to work with you and could decide to pursue a debt collection lawsuit or other collection efforts at any time. In most cases, the company lowers your payment by convincing the company to extend the payments, which results in more interest and longer to pay off the debts.
Contact Our Scottsdale Bankruptcy Attorneys for a Free Case Review
Each debt relief option has pros and cons. Comparing the various options is essential to help you decide which option is best for your situation. A Scottsdale bankruptcy attorney can help. Our lawyers go through each option and explain the pros and cons so that you can make an informed decision about how you want to deal with your debt problems.