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.

Posted in: Debt Settlement FAQ