Debt Settlement v. Bankruptcy in New York City

In these difficult economic times many consumers are choosing between debt settlement and filing for bankruptcy as ways to overcome their overwhelming financial hardships.  Our law firm works in the specific are of debt relief law, so we have helped people successfully utilize both strategies in the past.  Unfortunately, in many cases the benefits of debt settlement no longer outweigh the risks.  The credit card companies and banks have become wise to many of the creative debt settlement ploys that were working on them over the last few years.  We have seen it all in this law firm, and can tell you that filing for bankruptcy is almost always the better and safer option for most consumers.

We can explore the possible advantages of debt settlement for your specific case in a free consultation because debt settlement is not an option to be taken lightly- it can be like playing with fire.  At the end of the day debt settlement could end up costing more in hidden fees and taxes than most people realize, and many clients will also lose property when insisting to go this route.  Unlike bankruptcy if you are using property as collateral on a secured loan you will likely lose the property if you fall behind on payments.  If you have a car loan with the same financial institution as your debt consolidation loan, you could end up losing the car even if your car payments are current.  It’s usually in the small print.  These debt settlement plans may allow you to pay a lower monthly payment and at a lower rate, but you will still be responsible for the debt, and oftentimes even more in interest payments.  In our professional opinion paying less for longer is not real financial assistance, more like a way for the banks to make even more money on your hardship.  Don’t forget also that any money you save in the debt settlement plan will be considered income by the IRS and of course taxed accordingly.  The truth is, only bankruptcy gives you the ability to completely eliminate your debts forever.  Your protections with bankruptcy are written into law.  With debt settlement it can be anyone’s game.

The legal protection one receives when filing bankruptcy is vast.  It is important to work within your legal rights when fighting the very powerful bank and credit card companies.  Once you file bankruptcy your creditors may no longer contact you in any way.  If they try to contact you, they can be sued for a major violation.   Debt settlement simply does not have this type of teeth.    The debt you have with your creditors will be eliminated in the bankruptcy process.  You will be able to get on with your life and never have to worry about the financial troubles of your past.   You will have a fresh start and a second chance when filing bankruptcy, whereas the decision to enter into a debt settlement program might follow you for the rest of your life.

When clients come to us with overwhelming debt trouble we usually recommend bankruptcy now over any type of debt settlement plan because our clients usually need immediate relief and want a lasting solution.   After a brief consultation most clients see that there really is no choice when looking for the most powerful form of debt relief today.

If you live in New York City and need to compare the benefits of debt consolidation with those of filing bankruptcy please give the Law Offices of Williams Waldner a call at 212.244.2882 to schedule a free consultation today.  We will be happy to share the pros and cons of both options for your specific case.

This article is intended for educational purposes only.  By reading this article no attorney-client relationship has been created.