If you are struggling with severe financial issues, you should look into all available legal possibilities for debt relief. With all the information (and misinformation) concerning debt consolidation and debt settlement available, however, things can rapidly become unclear. While these solutions may occasionally be helpful alternatives to declaring bankruptcy, they might not be as successful in resolving your financial situation.
Keep reading to find out why a bankruptcy attorney in Rancho Cucamonga CA often will recommend Chapter 7 or Chapter 13 bankruptcy for clients. Then contact Law Offices of Terrence Fantauzzi at (909) 552-1238 to get a consultation for your specific case.
The difference between debt settlement and debt consolidation
To start, debt settlement and debt consolidation are two different processes. The two scenarios are as follows. Debt settlement entails paying a business to speak with your creditors on your behalf and settle your debt for less than what you owe, lowering your overall debt.
Debt consolidation is the process of combining all of your outstanding loans into a single loan so that you just have to make monthly payments to one creditor at one interest rate. This can result in a lesser payment requirement and a better interest rate.
Both debt settlement and consolidation may have drawbacks that should be considered. For example, to qualify for the refinancing loan and consolidate your debt, you’ll need a credit score of at least 680 and enough income to cover your monthly payments. You will frequently be advised to stop making credit card payments by third-party debt settlement companies, which can result in late fees and further debt.
It’s also worth noting that a debt settlement plan’s delayed or missing payments can have a significant negative impact on your credit score, the amount of debt forgiven in a debt settlement is treated as taxable income, lenders are not required to negotiate a debt settlement with you, and the completion of consolidation or settlement may take longer than a year.
Bankruptcy advantages
On the other hand, when you work with a bankruptcy attorney in Rancho Cucamonga CA, you can enjoy a number of benefits over debt negotiation or consolidation. It may take as little as six months to complete the process, which is much faster than debt settlement. You must stop being bothered by collecting agents immediately.
You practically have no unsecured debt when you go. It is discharged, with a few exceptions. With the discharge, you may start over and swiftly repair your credit. With so many factors to take into account, each person’s situation is different, so choosing between bankruptcy, debt consolidation, or debt settlement requires careful consideration.
Talk to an experienced bankruptcy attorney in Rancho Cucamonga CA today by calling Law Offices of Terrence Fantauzzi at (909) 552-1238 for help.