Is Debt Settlement Right for Me?
North Texas Debt Relief Attorneys
At your free initial consultation, we will review all of your non-bankruptcy and bankruptcy options so you can decide which avenue is best for your family. Many people struggling financially consider a debt settlement plan. High promising debt consolidation companies often give the impression that a settlement or consolidation plan is an easy way out. However, they do not adequately explain many of the extremely negative consequences of pursuing that avenue to you.
By all means, in appropriate cases we do assist clients in an accommodation (better known as 'debt settlement'). However, we do not do so without informing our client of the negative consequences of taking that course of action (such as the long term negative impact on your credit and increase in income tax liability).
Should I Work With a Debt Consolidation Company?
People who choose to work with debt consolidation companies to try to work out repayment plans often end up paying high costs for these services rather than putting their money towards paying off their debt. When an individual is in a vulnerable financial situation already, it could be risky for him or her to negotiate with a company that may or may not have his or her best interests in mind. If you hire us, there are no murky waters: You are our client.....not the banks.
The benefit of consulting with us is you will get experienced advice by a reputable financial attorney on all of your bankruptcy and non-bankruptcy options. That means you will be advised of all the credit, income tax, and financial repercussions of your decisions. In other words, it is pointless not to schedule a consultation with one of our attorneys. Contact us for a free meeting with a lawyer.
IRS Debt
Who wants to owe the IRS? If you settle your debts with your creditors outside of bankruptcy then under the Internal Revenue Code the debt that is forgiven is included in gross income. In other words, you are going to be taxed on that settlement. Plus, your credit will suffer greatly.
An exception to the gross income rule is discharge of indebtedness under the Bankruptcy Code. Plainly stated, if you discharge debt through a bankruptcy, it is not a taxable event! Plus, your credit score will have an opportunity to improve rapidly.
If you file either Chapter 7 or 13 and pass the Means Test, then you pay back none of your unsecured debt (credit cards, etc.) and pay only those things that you wish to keep (such as your house or your vehicles).
Is Bankruptcy a Better Option?
Unlike debt settlement plans where creditors have more strength, bankruptcy protects debtors. In Chapter 13 bankruptcy, the court will force your unsecured creditors to accept the bankruptcy plan even if you are paying them a small percentage or making absolutely no payments toward their actual claim. A private service has no such power.
For a free consultation to discuss your options for eliminating credit card debt, medical bills, and other debts, contact our law offices.
