Is Debt Settlement a Scam or a Good Option?

 Posted on June 30, 2023 in Debt Collection

When an individual is struggling mightily with debt, they often need assistance with resolving one or more accounts immediately. Waiting even a week to find a solution can result, under some circumstances, in repossession of a vehicle, the initiation of a creditor lawsuit, or so much stress when creditors call again and again that an individual’s mental health begins to break down. Because debt resolution issues tend to be particularly urgent in nature, bankruptcy alternatives – including debt settlement services – that promise quick results can be very attractive. It is simply important to understand the true ins and outs of any debt management or resolution opportunity before committing to an approach.

The Benefits and Limitations of Debt Settlement

Some debt settlement opportunities are legitimate. For example, if the Internal Revenue Service will allow you to submit payment for an offer in compromise, you will be able to settle your overdue tax balance for a fraction of what you owe. This can be a beneficial approach to debt resolution for debt that is not dischargeable in bankruptcy. However, for-profit debt settlement services – which often focus on debt that is dischargeable in bankruptcy – are often either scams or scam-like.

Also, no creditor is bound to agree to the terms of a debt settlement proposal. As a result, many debtors go into even deeper debt, incur additional late fees, and struggle with mounting interest while debt settlement companies try to negotiate with creditors who are uninterested in accepting a settlement offer. Additionally, most individuals who are struggling with debt do not have access to lump sum funds required to make debt settlement work. Therefore, they may be cornered into paying a debt settlement company high fees as they work to save enough to resolve their debt.

Debt settlement is a good option under limited circumstances and when negotiated carefully. However, most consumers in debt due to medical bills, credit card balances, personal loans, and even past-due mortgages find that bankruptcy suits their needs far better than debt settlement potentially could.

Schedule a Free Case Evaluation with a San Antonio Bankruptcy Lawyer to Learn More

Your particular financial circumstances may be best served by filing for bankruptcy or by pursuing a bankruptcy alternative. It can be difficult to know which options are most likely to be effective until someone with extensive knowledge concerning each opportunity assesses your finances, goals, and broader situation. By scheduling a no-cost case evaluation with our firm’s San Antonio, TX bankruptcy lawyer, you can place yourself in a strong position to make informed decisions in a pressure-free setting.

To learn more about your options and how each is likely to impact your circumstances, consider submitting a contact form on our firm’s website or calling our offices at 210-342-3400 to schedule a free legal consultation today. Rather than spending one more sleepless night worried about your debt, consider taking the first major step toward resolving it. We look forward to hearing from you.

Source:

https://www.consumerfinance.gov/ask-cfpb/what-are-debt-settlementdebt-relief-services-and-should-i-use-them-en-1457/