Debt Settlement

NJ Debt Settlement Issues

You are likely reading this because you are still on the fence about whether bankruptcy is right for you or if you should pursue debt settlement. Indeed, it may not be: you’ve seen the advertisements of credit counseling agencies trying to persuade people struggling with debt to pay them to negotiate with creditors. These agencies often claim that for most people debt settlement is a better alternative to bankruptcy, and they warn people away from bankruptcy because a bankruptcy filing can remain on one’s credit report for years.

First, while it is true that your bankruptcy filing will remain on your credit report up to ten years, how quickly you repair your credit after filing for bankruptcy relief is determined by your payment history from then on, and that, of course, is up to you and how you manage your debts after your case closes. The mandatory credit counseling and financial management training received as part of your bankruptcy case should assist you, in tandem with the “fresh start.” Also, consider that leaving unpaid debts out there, or even settling with creditors for a lower amount, also has a negative affect on your credit rating.

Second and most important, you should know that no creditor is required to negotiate with you outside of bankruptcy. Each of your creditors is entitled to be paid in full per the terms of their contracts with you, and creditors have little incentive to negotiate with you unless the law intervenes somehow. Filing a bankruptcy petition is the only sure way to stop collection efforts and force creditors to the table. Moreover, there may be some irreversible action pending against you that bankruptcy could “stay” and give you a last opportunity to remediate: Bankruptcy’s “automatic stay” is a powerful tool that not only gives you some respite from intrusive and annoying collection efforts, but also can under certain circumstances provide immediate reprieve from creditor actions against you, such as levy on bank accounts, garnishment of wages, eviction from or foreclosure on your home, and repossession of your vehicle.

Debt Settlement May be a Better Alternative to Bankruptcy

This being said, if you have only one or two delinquent accounts, or perhaps you have too much equity in your assets to avoid seizure by the bankruptcy Trustee, then it may be in your best interests to negotiate with your creditor(s) to pay off these debts in a lump sum or over time. Negotiation can take place either before or after a creditor files suit against you to collect on the debt, however, the sooner you can get help to negotiate with your creditors the better. Waiting until a creditor files suit against you may mean that you have to pay legal fees and filing fees to defend in that action. And, waiting until a creditor takes a judgment against you may mean that your wages can be garnished, your bank account may be levied upon, or a lien may be placed on your property. Once you know that a creditor is taking collection efforts against you, and perhaps planning to sue to you in order to collect on the debt you owe, contact us as soon as you are able so that we can meet and discuss ways that you can avoid these possibilities.

There are pros and cons to filing a bankruptcy petition and to debt settlement, of course. One final factor to consider is that if you are successful in settling a delinquent account with a creditor and pay that creditor less than what was contractually owed, the amount of debt that is forgiven by that creditor is generally taxable to you as income. This is another factor to discuss when you are weighing all of your options at your consultation.

Please take note of this important caveat: the information on this page is not legal advice, nor is it intended to be legal advice. The purpose of this page is merely to introduce you to some basic concepts so that you can have an informed discussion about your options when you attend your consultation. We look forward to meeting with you and to helping you to achieve your “fresh start.”

Contact Us

Your Name (required)

Your Email (required)

Subject (required)

Your Message (required)

Office Locations

Burlington County
10 North Chestnut Ave
Maple Shade, NJ 08052

Camden County
1812 Berlin Rd
Cherry Hill, NJ 08003

Office Hours by Appointment Only

Connect with the firm
http://www.facebookloginhut.com/facebook-login/ http://www.facebookloginhut.com/facebook-login/