When you’re in debt, you may try everything to ease the financial burden hanging over your head. As such, one option you may wish to explore is debt settlement, in which you can work out an amount to pay off the owed debt with your creditors. However, if this is still not a viable option for your situation, you may feel unsure of where to turn. The following blog explores what you should know about whether or not you can declare bankruptcy while attempting to settle with creditors and the importance of working with Franklin County bankruptcy lawyers to assist you through these complicated matters.
What Is Debt Settlement?
Deb settlement, as the name suggests, is the process in which you negotiate with your creditors to repay the debt you owe at a reduced amount. In general, debt settlement will only apply to unsecured debts, like credit cards or personal loans.
While this may seem like it would not benefit the creditors, many prefer debt negotiations over other options. This is because creditors are guaranteed to receive some compensation for the debt they are owed, as opposed to bankruptcy, which puts them at risk of receiving nothing during this process. However, by agreeing to a settlement amount, which can be reduced by as much as 50% of the debt in some instances, the creditor is able to receive a lump sum payment.
Is It Possible to Pivot to Bankruptcy During This Process?
In some instances, debt settlement may not work in your favor. You may be unable to reach a viable amount with a creditor, or they may flat out refuse to negotiate. Unfortunately, some creditors may even go so far as to file a lawsuit against you while you are actively attempting to negotiate with them, which can only cause additional stress and frustration.
As such, you may decide that this option is no longer right for you. If this is the case, it’s imperative to understand that you can pursue bankruptcy, even if you were in negotiations with a creditor. However, you should note that if you sign a legally binding document regarding a debt settlement amount and payment terms, you will be unable to void this contract, even through bankruptcy, which is why it’s vital to connect with an experienced attorney during these difficult and overwhelming times.
At Cousino & Weinzimmer LLC, we understand how important financial relief is to you, which is why we will examine your unique circumstances to help you determine the best course of action for your needs. If you decide to pursue bankruptcy, our team can guide you through this process so you can reap the full benefits. When you need assistance, contact us today to learn how we can represent you.
