Bankruptcy Vs Debt Settlement – How To Evaluate The Alternatives

Working with a debt settlement agency involves knowing the advantages and disadvantages involved in debt settlement. With an experienced team of Arizona debt relief lawyers, company can analyze your unique personal financial circumstances, guide you through the debt relief options available to you, and assist you decide whether debt settlement would be the best option for you. You are at an advantage when working with a debt settlement firm, because they can explain debt settlement in a way that even a novice can understand. The first step that a good debt relief company in Chandler takes is assessing your debt.

A debt settlement company might offer several debt settlement programs in Arizona, but the two most common programs are debt consolidation and debt settlement. Debt consolidation companies take over your unsecured debt and pay it off with a loan that is secured by your home or other property. Often, the creditors accept reduced payment amounts in exchange for avoiding the potential of foreclosure. This type of loan has a significantly lower interest rate and longer payment terms than most loans offered by banks, credit unions, or other financial institutions.

Once you have agreed to a debt settlement company, your creditors are contacted, and you make arrangements with the company to pay them over a period of months or years. In most cases, your creditor agrees to a settlement because he realizes that he must deal with the debts in the order in which they were incurred, or else he will lose the entire investment made on those debts. Debt consolidation companies negotiate on your behalf with your creditors, often reducing your interest rates and extending the terms of your payments. This saves both you and your creditor money and allows you to pay off your debts much more quickly than before.

There are other debt negotiation options that you may choose to pursue, as well. You can hire a law firm to represent you in negotiations, but you must bear in mind that most law firms charge a considerable fee for this service. A far less expensive option is to work directly with your creditors on your own. In many cases, you can reach agreements that result in a significant reduction in your overall debt. If you are determined to settle your accounts without the assistance of a law firm, you may be able to settle your accounts for less than the total amount owed, taking advantage of a new statute that allows debtors to obtain a 50% waiver on their debt obligation.

If you are facing financial distress and considering either debt consolidation or debt settlement, you should research each method very carefully. While debt settlement offers immediate relief, bankruptcy does not. Neither program is right for every individual and there may be serious drawbacks to each which you should consider carefully.

While debt settlement does offer a significantly lower monthly payment and lower interest rates than would result in bankruptcy, it also requires that you give up some of your assets to settle the accounts. If the value of the items being sold is less than the balance of the debt, the creditor will receive nothing. Bankruptcy, by contrast, involves the liquidation of all your bank accounts and other financial holdings, which means that you may lose your home, cars, luxury vacations, business and car assets, and even your retirement savings if the court decides you should be granted a bankruptcy stay. Unless you are sure you want to lose your property and face a potential financial hardship, debt consolidation may be a better alternative for you in the end.