What's Better: A Debt Settlement Company Or Bankruptcy?

We've all heard the late-night television and radio ads from companies who promise to work with creditors to pay off your debt. Some are even "nonprofit" organizations, making themselves sound as if they are only in it to help you.

The truth is, many debt consolidation organizations are funded by credit card companies, in an effort to get people to keep paying on debt they will never be able to pay off.

Many private debt settlement companies don't even start negotiating with creditors until you have put a certain amount of money into a settlement account. And while you are paying into the account, you are still legally required to pay your monthly credit card bills. That's not debt settlement; that's extortion.

Debt Settlement Schemes Are Not A Real Alternative To Bankruptcy

I'm Memphis debt relief attorney Ben Sissman. For more than 30 years, I have helped people like you, with families just like yours, deal with debt problems. I offer a free initial consultation to discuss your situation and answer your questions about bankruptcy vs. debt settlement.

A Bankruptcy Lawyer Can Explain The Pitfalls Of Debt Settlement Schemes

Debt settlement can be a solution to debt problems if you do not owe too much money, the creditor is willing to make the deal, and the debt settlement company is a reputable firm. Unfortunately, many for-profit debt settlement firms want far too much money for their services and may only leave you further in debt.

Here are some of the pitfalls of debt settlement:

  • Fees are typically front-loaded. While you are making payments to the debt settlement firm, you will be going deeper into debt. The debt settlement firm may not even start work on your case until you've paid your entire fee. By that time, the credit may already be suing you to collect the debt.
  • Many creditors are not willing to negotiate debt.
  • If a creditor agrees to forgive a percentage of what you owe, you will incur a tax liability for any debt that is canceled. Depending on the amount of debt forgiven, you could end up owing thousands of dollars to the Internal Revenue Service.
  • In the end, you may end up trading one creditor for another.

Only bankruptcy allows you to obtain a complete discharge of debt. When you file bankruptcy, creditors cannot say no, and you are protected from adverse creditor actions such as harassing phone calls, lawsuits and repossessions. In addition, you do not incur a tax liability for debt discharged through bankruptcy.

Free Initial Consultation | Bankruptcy Law Firm in Western Tennessee

For more information about debt settlement vs. bankruptcy, call 866-788-0394 or send an email to schedule a meeting today.

The law office of Ben Sissman is a debt relief agency that helps people file for bankruptcy relief under the Bankruptcy Code.