Alternatives to Filing Bankruptcy
Bankruptcy is not the only way to handle your debt problems. It is best to continue paying your debts in a timely manner. However, that is simply not an option for many people with debt problems. An experienced debt lawyer can you find an alternative to bankruptcy that best works for your situation.
Debt settlement involves negotiating arrangements whereby creditors agreed to take less than the full amount due in a lump-sum payment. This solution is very dangerous because you must become extremely delinquent on your debts in order to gain the leverage necessary to obtain significant settlements. Even then, nobody can guarantee that a certain debt can negotiated, and if so, for how much. There is also no guarantee that a creditor won’t sue you before a negotiated settlement can be arranged.
Debt settlement affects how much you pay in taxes. If you owe $5,000 on a credit card and settlement reduces the amount to $2,500, the savings of $2,500 is taxable income to you. You must th