San Jose Debt Settlement Attorney | San Jose Debt Settlement Lawyer | San Jose Debt Settlement Law Firm

1. What is debt settlement?
2. Who should consider Debt Settlement?
3. Who can negotiate the debt settlement?
4. How does debt settlement work?
5. What are the advantages of debt settlement?
6. What are the fees involved with a Debt Settlement program?
7. What are the disadvantages of debt settlement?
8. Can I be sued for my debt?
9. Are there tax consequences to debt settlement?



Q: What is debt settlement?
A: Debt settlement, also known as debt arbitration, a work out or debt negotiation, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. Debt settlement may be an alternative to bankruptcy if you have some money, but just not enough to entirely pay all your creditors.

Since the creditors recognize the fact that in many instances we can file a bankruptcy and eliminate their debt altogether, they tend to pay more attention to a San Jose debt settlement attorney with bankruptcy options than other organizations who only offer debt reduction services and not bankruptcy.

Additionally, creditors understand that when dealing with an attorney, litigation will be considerably more costly and require more work than suing an unrepresented debtor. Being represented by a San Jose bankruptcy attorney lets creditors and collection agencies know that you will be fairly and aggressively represented, so that they will more inclined to agree to reduce your debt as quickly and as painlessly as possible.

Debt settlement is one solution that is an alternative to bankruptcy that allows you to reduce your debt and become debt free faster than you will be able to do on your own.

Generally, as long as consumers continue to make minimum monthly payments, creditors will not negotiate a reduced balance. Therefore, debt settlement often requires the Debtor to stop making payments to the Creditors. Stopping payments will have a negative impact on your credit. In addition, balances continue to grow because of late fees and ongoing interest.
 
Q: Who should consider debt settlement?
A: We believe the best candidate for debt negotiation is someone who is on a fixed income, someone who is self-employed, or someone who is an independent contractor. Normally, these wages cannot be garnished, making the prospect of a lawsuit substantially less and/or the collection of a judgment virtually impossible. Debt settlement may also be appropriate for someone who cannot qualify for bankruptcy. JC Law Group provides debt settlement attorneys in San Jose to assist debtors with making the best decisions on how to handle debt.
 
Q: Who can negotiate the debt settlement?
A: Consumers can arrange their own settlements by using advice found on web sites, hire a lawyer to act for them, or use debt settlement companies. Some settlement companies may charge a large fee up front (often called “good faith” money); or take a monthly fee from customer bank accounts for their service, possibly reducing the incentive to settle with creditors quickly. Before deciding to hire a debt settlement company, be sure to check out the company with the Better Business Bureau and the Attorney General’s Office of your State.

Please check:
Federal Trade Commission
California Attorney General’s Office
Better Business Bureau
 
Q: How does debt settlement work?
A:Essentially, you, your attorney, or a debt settlement company negotiates upon the borrowers’ behalf with creditors to reduce the overall debts in exchange for an agreement upon regular payments or a lump sum settlement. .
 
Q: What are the advantages of debt settlement?
A: For the debtor, debt settlement can sometimes make sense where the debtor does not qualify for a Chapter 7 bankruptcy and under Chapter 13 bankruptcy , the debtor would be required to pay back most of the unsecured debts anyway. The debtor can sometimes reduce his or her debt balances by more than 50%. Whereas, for the creditor, they regain trust that the borrower intends to pay back what he can of the loans and not file bankruptcy (in which case, the creditor risks losing all monies owed).
 
Q: What are the fees involved with a Debt Settlement program?
A:It depends on the number of cards you have, and the amount of your debt. We will quote you either a flat fee or hourly rate as is appropriate to your circumstances for negotiating your debt. Please note that the fee does not include any cost of litigation should the creditor sue you.
 
Q: What are the disadvantages of debt settlement?
A: Unlike bankruptcy, there is no guarantee that the creditors will agree to a settlement. There is no “formula” to debt settlement as there is to bankruptcy. It can be a long, often tedious process to negotiate with every credit card company. Each creditor has their own debt settlement method, and many tend to have an aggressive resistance against negotiations. There is also no bankruptcy protection that stays any collection efforts by the creditor. There’s always the possibility of lawsuit whenever debts lay unpaid.

In Chapter 7 bankruptcy, you owe the credit cards nothing after the bankruptcy. The debts are forever discharged. In debt settlement, if you fail to pay the credit card company the negotiated amount, they can come after you for the debts, plus interest, and any applicable fees.

The following are issues you should consider when contemplating debt settlement:

• Your credit score will suffer.
• Your accounts will be paid off but will not show up on your credit report as “paid in full” UNLESS the debt is paid off through a 3rd party debt buyer.
• We CANNOT guarantee we will be successful in negotiating your debts down.

Bottom line is that debt settlement is a bankruptcy alternative for those who need to get out of debt because it is past the point where they can reasonably get out of their financial situation without a more drastic solution. Consult with a San Jose debt negotiation lawyer for more information.
 
Q: Can I be sued for my debt?
A: Yes. A creditor can sue you for the debts that you owe unless you work out a settlement, or file for bankruptcy protection. As long as your debts are in default, the creditor or its assignee can still file a lawsuit against a debtor. This is one of the advantages of using an attorney for debt settlement. The attorney can handle any lawsuits filed in an effort to collect the debt.
 
Q: Are there tax consequences to debt settlement?
A: Another difference between filing for bankruptcy and debt settlement is tax consequence. In bankruptcy, there is no tax liability to the debtor for the discharge. In debt settlement the Debtor may need to report the canceled portion of the debt as taxable income. (See IRS Publication 908) The Internal Revenue Service considers $600 or more of forgiven debt as taxable income. The forgiving creditor must provide the taxpayer with a 1099-C tax form. You may need to consult with an accountant to determine any tax liability as a result of debt settlement.