Why a Debt Settlement Company May Not Be Your Best Option

Your debt is out of control and there’s no way you can honor the obligations to all of your creditors. Someone suggested that you look into the idea of seeking help from a debt settlement company, but you are a little skeptical. Are they the best solution for your financial woes? Before making a decision, talking with one of the bankruptcy lawyers in Brooklyn NY is a smart move. You are likely to find that filing a Chapter 7 or Chapter 13 bankruptcy would be a better choice. Here are some reasons why.

Not Every Creditor Will Work With a Debt Settlement Company

Creditors are under no obligation to negotiate with a debt settlement company. No matter what you are told, a creditor does not have to take the offer provided by the settlement counselor. If some of your creditors do settle while others do not, you could find yourself in worse financial shape than before.

Consulting with a lawyer at Ursulova Law Offices will determine if you are eligible for bankruptcy protection. If so, all your creditors must accept the court’s decision. That factor alone makes bankruptcy a better choice for most people than debt settlement.

Forgiven Debt Could Be Treated as Income

As any Brighton Beach bankruptcy lawyer will tell you, the amount of debt each creditor forgives is likely to be viewed as income. That means you will owe taxes on the forgiven portion of the debt. By contrast, debt dismissed by the court or repaid under the protection of a Chapter 13 bankruptcy action is not considered taxable income.

You Could Still Face Judgments and Garnishments

Debt settlement, especially when creditors decline to participate, leaves you open to more collections efforts, judgments, and eventually garnishments on your income. Once your Brighton Beach bankruptcy lawyer files your bankruptcy petition, taking legal action against you becomes impossible. Even proceedings that are in progress may come to a halt.

From the moment you are placed under the protection of the court, you no longer have to worry about any action on the part of the creditors. They will now communicate with the court only.

Are you unable to pay your debts and need a fresh start? Call the team at Ursulova Law Offices today and arrange for a consultation. It could be the beginning of a brighter financial future.