Negotiating Debt Settlements: What Are Your Options and Where Do You Start?

Posted on in Debt Relief

Illinois bankruptcy attorney, Illinois det relief lawyerWithout a doubt, one of the most stressful aspects of facing debt is implementing a plan to get out of said debt. When personal or business bankruptcy is your last resort - as it should be - it is only natural to want to explore your alternatives, such as debt settlement with your creditors.

However, just as filing for bankruptcy can mean a lot of worry over the effects on your credit rating and record, attempting to negotiate debt settlements with your creditors presents its own set of challenges and concerns. The question is truly a matter of which path best suits your needs and the nature of your circumstances.

Taking the First Step

If you have decided to first try and arrange a settlement with your creditors before jumping on the bankruptcy bandwagon, you need to consider the following factors:

  • The total amount of your debts and how deeply in the “red” you are living;
  • Whether or not you are able to pay a large amount up front or if you can realistically pay a specific amount on a monthly basis (the larger amount you can pay up front or the larger the monthly payment, the better chance you have at negotiating a settlement); and
  • Dealing with creditors directly can be an exhausting task, and you may not be able to reach the same level of negotiation you would otherwise reach with a professional attorney. Ask yourself whether or not you are prepared to interact and negotiate with the companies demanding money from you. Chances are you are already familiar with the hassle of the stressful phone calls; speaking with creditors further can increase the emotional and mental toll you are already experiencing.

Debt Settlement Companies

Although negotiating settlements directly with creditors can offer a good alternative to filing for bankruptcy, there are downsides to debt settlement. First, there are definite risks involved. For example, one option you might pursue is a debt settlement company, who speaks to creditors on your behalf. Many of these debt settlement programs require you to deposit certain amounts of money into a special account for a lengthy period of time before they allow you to settle the debt. Others will settle your smaller debts first, leaving your larger debts with larger interests hanging, meaning you end up paying more in the long run. Additionally, there still may be harm to your credit report and fines and fees assessed for your debts even after you arrange a payment program.

The Last Resort

If you have attempted to speak with creditors yourself and explored debt settlement programs through various companies and are still struggling, it might be time to seriously think about filing for bankruptcy. Regardless of the avenue you take, it is important to work with a professional Cook County tax law attorney to protect your rights and ensure you strike the best deal with your creditors. Call the Law Offices of Eric G. Zelazny today at 708-888-2299 for a consultation.

 

Source:

https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt

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