Being overwhelmed with debt and not seeing a way to pay it all leads to many sleepless nights. That’s especially true when some of those debts cannot be discharged by filing a chapter 7 bankruptcy. Something has to be done, and a friend suggests talking with an attorney about debt settlement in Lithonia, GA and how it compares to filing a chapter 13 bankruptcy. Here are some of the differences between the two strategies that debtors need to know.
Understanding How Debt Settlement Works
An attorney who offers help with debt settlement in Lithonia, essentially enters into negotiations with all the creditors. The goal is to come up with some type of arrangement that accomplishes two things. First, the outstanding balances are no longer subject to finance charges and late fees. Second, the creditors generally agree to accept a figure less than the current amount owed in exchange for the reduced balance being settled within a specified period of time.
A settlement works well in many cases. It has the effect of stopping collection calls, preventing the accumulation of more debt in the form of charges and penalties, and making it easier to get out of debt.
What About a Chapter 13?
Part of the confusion that some people experience is that a chapter 13 bankruptcy also requires monthly payments, and all of the debt may or may not be repaid in full. The difference is that the payment is tendered to the court trustee who then distributes the funds based on a plan approved by the court. Debts classed as priority obligations are paid first and other disbursements are then made to the remaining creditors. If those non-priority debts are not paid in full at the end of a five-year period, the court discharges any remaining balances.
Determining the most practical way to deal with crushing debt is not something to face alone. Visit website today and arrange for a consultation. Bring along information about income, outstanding debts, recent bank and credit card statements, and anything else that has some relevance to the current financial situation. Together, it’s possible to explore different options and decide if debt settlement is a viable approach or if filing for bankruptcy would be best.
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