Truth – nobody really wants to file for bankruptcy. Most people want to pay their debts and in an ideal world they would. If this describes you then I really want you to read this blog to fully understand what you are getting into.
Debt Settlement can be an extremely useful tool for some people. The perfect candidates for this type of program are those who have monthly disposable income and can afford to pay an agreed amount to their creditors. They must be able to make time to really focus on their finances and be diligent in making monthly payments for Debt Settlement to work.
Additionally, you need to be aware of the tax implications with Debt Settlement. For instance, if your creditor agrees to forgive a portion of your debt, this is considered taxable income and you will receive a 1099 form. So be prepared to deal with the possibility of paying taxes on the forgiven debt. For those of you who already have IRS problems, this could lead to an even bigger issue.
Debt Settlement takes time and patience. If you are going this route on your own you need to understand that it’s not a sure thing. You may have to negotiate for months with your creditors before coming to an agreement.
Another issue I want you to be aware of is that many Debt Settlement Companies charge high fees for these types of programs. When considering your options you need to figure in the amount of monthly fees you will be paying for your Debt Settlement to determine if this is a feasible option for you.
Again, for some people Debt Settlement can be a great financial tool, but understanding the difference between Debt Settlement and Debt Relief through Bankruptcy is vital before embarking on the Debt Settlement journey.
Unlike Debt Settlement, Bankruptcy offers immediate debt relief. This even applies to pending lawsuits, including garnishments. If you are a consumer considering your Bankruptcy options you have two choices – Chapter 7 or Chapter 13. Chapter 7 is the most popular Bankruptcy for those of you who fall below the Florida median income level. What’s great about a Chapter 7 is that it only takes about four months from beginning to end. If you don’t have any substantial assets then you pay nothing to any creditors and you get a fresh start.
For those who earn more than the Florida median income level or have quite a few assets, Chapter 13 is the way to go. You will have monthly payments in a Chapter 13 Bankruptcy from three to five years, depending on your income level, but your payments are based on what you can afford each month after taking into consideration all of your monthly income and expenses. This is a great option for those who want to keep all of their assets and who can afford to pay back some or all of their debts. Neither type of Bankruptcy have any tax implications. So, contrary to Debt Settlement you will not receive any type of 1099 form from your creditors, which is a huge plus in my book.
If you are considering your options talk to a qualified Jacksonville, Florida attorney. I cannot speak for other attorney’s, but I’m happy to offer my time to help you make some decisions. You can contact my office at 904-421-6907 in Jacksonville, or 904-491-1083 in Fernandina Beach, or email Michelle.PetersLaw@gmail.com to schedule a free consultation