Our Maryland and Washington DC Bankruptcy Lawyer Explains Why You May Have Better Options
If you find yourself in a difficult financial situation, debt settlement companies and their sales pitches could start to sound very appealing. Who would not want to reduce their debts by more than half? We would all like to be able to do that; however these companies cannot magically make your debts disappear. Kevin D. Judd is a Washington DC and MD bankruptcy lawyer with years of experience working with clients in difficult financial situations.
You should carefully review and research all your options when considering debt settlement or bankruptcy. This is why we offer a free phone consultation to all prospective clients. We will review your case and give you our advice as to what you should do next at no cost and with no obligation to hire our office.
On the surface, debt settlement does not seem like a bad idea. The company claims that you simply make payments to a debt settlement company, and they then pay your creditors at a reduced rate. However, these agencies gloss over the negatives to take advantage of your financial difficulties. A few things that you should know about debt settlement companies:
- You pay a fee to the settlement company. This means that you are adding an additional expense when you are already overextended.
- These companies do not do anything you cannot do yourself. Some may make claims to have special relationships with creditors, but this is likely not true.
- Debts must be past due before creditors will consider a settlement. Agencies will advise you to stop making payments until they reach a settlement agreement. This will negatively damage your credit, with little to no hope of improvement.
- While you are past due on your debts, the creditors do not have to agree to a debt settlement offer. Instead, they can sue you in civil court, attach wage garnishments to your income or bank accounts, repossess your car or other property and foreclose on your home.
Debt settlement cannot stop creditors from legal action against you, but bankruptcy can. Additionally, while your credit will likely go down when you purposely default on your loans, bankruptcy will offer you a fresh start with credit. Most of our clients have poor credit when they file bankruptcy, and it only improves in the aftermath of filing.
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