Many Americans struggle with debt, but they are all at different points along the timeline of the vicious debt cycle. Some individuals have just started to fall behind on monthly bills, finding themselves only making minimum payments that they can afford. At this stage, you could begin to note how your underlying balance does not go down because your payments apply to interest and late fees. The other extreme is a person who misses payments and receives threats of legal action from creditors. Debt has spiralled so far out of control that bankruptcy could be the only reasonable solution.

If you find yourself in between these points, you are among the millions of people who might consider debt settlement to resolve crushing debt. You are unable to stay ahead with payments, and creditors are starting to call. However, you are reluctant to file for bankruptcy because you have confidence in your options for debt relief. Settling your debt by agreement may be the right fit, but the process requires you to work with creditors.

To get the best results with debt settlement negotiation in Athens, GA, legal help is essential. It is a mistake to go it alone since mistakes could put you further into financial trouble. You should trust an Athens, GA debt relief attorney for assistance with negotiating debt settlement, and the following information should be convincing.

Basics of Debt Settlement

You are certainly not alone if you are facing challenges with debt. According to the Federal Reserve Bank, household debt in the US has reached $17.29 trillion. The top types of debt that individuals and married couples carry are their home mortgage, credit cards, and student loans. Though they may have difficulties with monthly bills, they are not in a position where bankruptcy would offer benefits.

Instead, debt settlement might be a solution to consider. Through the process, you organize your debts and evaluate your current financial position. In a typical case, you will approach a creditor with an offer to settle the account for a lump sum. Negotiations can be complex because you do have rights as a debtor, but you may not know how to exercise them in settlement discussions.

A debt settlement attorney is a key asset when negotiating your debt. Besides knowledge of the laws, your lawyer has skills to encourage compromise. A creditor may be willing to work out an agreement because of the possibility that you could file for bankruptcy. You can leverage the best deal with legal help.

Debt Relief for Different Types of Debt

For debt settlement and other debt-relief options, working out a plan with creditors will depend upon the nature of your debt. Debt settlement is also not suitable for student loans, taxes, and some debts you take out through your business. Notably, you will typically not be able to negotiate a debt settlement for a secured loan. This type of credit is secured by collateral that you pledged when taking out the loan. For instance, your home acts as security for your mortgage. If you do not pay, the bank has foreclosure as an option to recover its funds.

However, unsecured debts are a top reason people seek debt relief through debt settlement. With unsecured debt, there is no collateral for a creditor to exercise its security interests. Examples of unsecured debt that can be resolved through debt settlement negotiations include:

• Credit and retail store cards;
• Medical bills;
• Personal loans; and,
• Lines of credit.

A creditor for unsecured debts has an incentive to at least attempt a debt settlement with you, since your next legal move might be bankruptcy. Your debts would be discharged, and the creditor would get nothing.

Debt Settlement v. Other Debt Relief Options

Debt settlement involves an agreement where you pay a sum, and the creditor accepts the amount as payment in full to wipe out that particular debt. There are additional options for debt relief, including debt consolidation. With this solution, you combine all debts into one amount. You arrange a consolidation loan with a lender that either covers monthly payments or pays a lump sum to wipe out your debt. Unlike debt settlement, you will continue to make payments to the lender that extended your debt consolidation loan.

Though you may not think of it as an option, you should at least understand how bankruptcy works as a solution for debt relief. By filing with the US Bankruptcy Court for the Middle District of Georgia, you may be able to discharge qualifying debt. Both Chapter 7 and Chapter 13 offer a process, though the rules are very different.

Pros and Cons of Debt Settlement Negotiation

As you review debt settlement among other options for debt relief, there are some advantages and disadvantages to keep in mind.

Pros

• Debt settlement can be an ideal solution when you want to get rid of debt as quickly as possible. Consolidating your debt means you still have debt that you pay monthly well into the future.
• When you work out a debt settlement, the agreement must include a provision that the creditor will not take collection action as long as you continue to make payments. You will not have to worry about a lawsuit, but you may have to negotiate this point with help from your Georgia debt relief attorney.

Cons

• With debt settlement, there are implications for your credit score. This number is based on your history, and creditors will typically report the settlement agreement to the three main credit bureaus to be included in your credit report.
• If you resolve debt via settlement, there could be implications as far as taxes on the reduced debt. The details vary according to IRS regulations.

Creditor Options for Collecting Debt

Whether you review debt relief solutions or consider bankruptcy, you should be aware of what creditors can legally do to collect. The first step in most cases will be filing a collection action, a lawsuit in which the creditor seeks relief in the amount of the total debt. If served in a collection lawsuit, you will need to defend the claims if you have grounds to do so. Most collection actions result in a judgment in favor of the plaintiff-creditor.

From there, the creditor will employ different tools for obtaining the amount of the court’s judgment. One option is wage garnishment, in which the creditor directs your employer to divert a percentage of your wages. Anywhere from 25 to 30 percent of your wages will go to the creditor to pay the judgment amount. Another solution available to a creditor is attaching property, including your bank accounts. These are harsh remedies, which should inspire you to take action through debt settlement, other debt relief, or bankruptcy.

Comparing Debt Settlement to Bankruptcy

Debt settlement will require you to pay a lump sum or other amount, which you may not be able to afford even if this solution seems ideal for you. Under the circumstances, bankruptcy may be a way out of debt. In Chapter 7, you can wipe out debts if you qualify. The bankruptcy trustee has the power to liquidate assets to satisfy debts, so your nonexempt assets can be sold. With Chapter 13, you complete a debt repayment plan to satisfy debt to creditors. Your debts are restructured and reduced into an amount that you can afford, and you will pay throughout 3 to 5 years.

Debt settlement will not discharge your debt. It will remain until you meet the terms of the agreement you negotiate, but you could still pay an amount that is close to the total that you owe. There is also no protection from creditor actions with debt settlement. With bankruptcy, the automatic stay on creditor actions goes into effect the same day you file. Creditors are prohibited from:

• Filing a lawsuit or moving on an existing collection action;
• Starting a wage garnishment or continuing to garnish your wages; and,
• Placing a lien, seizing, or attaching property.

How a Debt Settlement Lawyer Supports You

One of the most important services that an Athens, GA debt relief attorney can provide is advice and counsel on your options. Debt settlement has its advantages, but non-bankruptcy solutions also offer benefits. If your debt has reached a certain point, a lawyer will guide how bankruptcy may be the right fit.

Concerning the debt settlement negotiation process, you will need qualified legal services at each stage. You can rely on a Georgia debt relief attorney to handle all essential tasks for negotiations, including:

• Reviewing your financial documents, including paperwork on assets, debts, income, and expenses;
• Developing a strategy for debt settlement negotiations;
• Preparing an offer for settling your debt with creditors;
• Assessing any counteroffers and discussing responses with you;
• Presenting information on whether you qualify for Chapter 7 bankruptcy, which could persuade a creditor to compromise;
• Drafting all written documentation necessary to define the debt settlement agreement; and,
• Assisting with all matters that arise out of the agreement.

Set Up a Free Consultation with an Athens, GA Debt Relief Lawyer

If you are considering ways to take control of your finances, it is crucial to have legal assistance with debt settlement negotiation. Legal counsel is crucial, and you could harm your interests by trying to go it alone. Our team at Morgan & Morgan, Attorneys at Law, P.C. has extensive skills with settlement discussions, so we are ready to get the best possible outcome. Please contact us to set up a free consultation at our offices in Athens, GA. A Georgia debt relief attorney will explain more about debt settlement after reviewing your case.

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