Debt Relief Services In Florida
What are my debt relief options? When you reach a point where you know you are having trouble with your debts, how do you figure out which option is right for you, and how do you compare risk, time, out-of-pocket, and short term/long term credit impact?
There are a number of different debt relief options, and they span the spectrum from low-risk, low reduction in payment, as compared to higher risk but in some instances higher reduction in payment. It’s important to review all of your options and see how they fit into your financial situation.
Summary of Debt Relief Options for Individuals:
- Request an interest rate reduction from existing credit cards
- No credit impairment
- It’s easy
- If your debt isn’t too far outside of your budget, this can be enough to get the balances under control
- No change to balance
- Not a huge difference in monthly payments
- Refinance debt with a new lender (aka “debt consolidation loan”)
- No credit impairment
- Usually you are reducing the interest rate on the debt
- Puts several debts into a single payment
- Often not an available option if debt is already behind
- No debt reduction
- Debt Settlement – creditor agrees to pay off a debt for a reduced amount
- Close out the debt for a reduced amount
- Credit impact is better than non-payment
- Have to be cautious about terms of settlement
- Should make sure you aren’t paying on an uncollectible debt
- Not as good for credit as paid in full
- Debt settlement can have tax consequences.
- Debt Consolidation Plan – make monthly payments to a debt facilitator who negotiates several debts for you.
- Generally results in paying off several debts that usually are already behind at a discount
- Get the benefit of a professional negotiator and take the stress off your shoulders
- Payments are designed to be in your budget.
- Similar to Debt Settlement.
- Chapter 7 Bankruptcy
- Get rid of your debt with no payment plan.
- Have to meet certain qualifications
- May not qualify if your household income is too high
- May have to give up “extra” assets as trade off for eliminating debt.
- Chapter 13 Bankruptcy
- Get rid of your debt with a payment plan designed to be in your budget
- Can file even if over the income qualification for Chapter 7
- Can keep the assets you may otherwise have to give up in chapter 7
- 3-5 year commitment.
Here we will break these options out into a little more detail:
The Low Impact Debt Relief Options:
1. Request an interest rate reduction from existing credit cards
This is a great place to start, particularly if you are still up to date. It won’t make a huge difference in monthly payments, but reducing the interest rate can mean a real reduction in your out of pocket over the course of time. Like Wayne Gretzky said, “You miss 100% of the shots you don’t take.” There is no harm in calling your credit card companies to ask if they will reduce your interest.
2. Debt Refinance / Debt Consolidation Loan
If you have a number of debts, this can be a good option to simplify what you owe to a single payment, as well as to hopefully reduce the interest rate. There is no adverse credit impact and no litigation risk. However, be cautious that you do not fall into the “rob Peter to pay Paul” trap. Don’t refinance your loans just to build the balance back up on the accounts you pay off. That will quickly put you into debt quicksand, building the balances up beyond what you can handle.
The Medium Impact Debt Relief Options:
3. Debt Settlement
If you have been behind for a period of time, it can be possible to settle on your debts. While sometimes, this can present an opportunity to pay off a balance for a reduced amount, it can also present some added risks. First, by virtue of being behind, it is possible that the company collecting on the balance may file a lawsuit. Second, you have to make sure that any settlement offer is legitimate – that it is from a company authorized to make the offer, and that the deal is what they say it is. You also should make sure that it is still a valid debt, and that it isn’t too old to be collectible. Finally, in some instances, settled debt can result in a 1099.
If a debt is already in a lawsuit or a judgment has been entered, it can still be possible to settle on the debt. If this is the case, you should really consider getting professional assistance.
4. Debt Consolidation / Debt Management Plan
Debt Consolidation is like debt settlement, but usually a professional is assisting you with the negotiations and you are making a monthly payment into an escrow account for them to negotiate with. This is a good option to eliminate debt at a reduced amount, particularly if bankruptcy may not be right for you. The risks are similar to debt settlement; however, particularly, if the professional assisting you is a lawyer (like us!), some of these risks may be mitigated.
The Higher Impact Debt Relief options:
5. Chapter 7 Bankruptcy
In many instances, Chapter 7 is the fastest and least expensive option to wipe the slate clean. Chapter 7 is known as the “liquidation” chapter of bankruptcy. In order to file Chapter 7, there is an income qualification. Additionally, the trade-off in chapter 7 is that in exchange for wiping out your debts, you are limited on the assets you can keep. Chapter 7 will have a negative impact on credit, but it also clears all of the balancing on a credit report, which often allows filers to build their score back up faster than they otherwise would if the accounts just stayed on the report. Usually Chapter 7 is a helpful option for those who have issues with unsecured debt.
6. Chapter 13 bankruptcy
Chapter 13 is known as the “reorganization” chapter of bankruptcy. In a nutshell, it takes all of your debts and puts them into a payment plan that lasts between 3-5 years. The plan is based mostly around what the filer can afford. If the debts are not paid in full by the end of the plan, the balance is usually discharged (except student loans, which seem to be able to survive a nuclear holocaust). Chapter 13 is a good option if you are behind on secured debts (your mortgage or car loan) and you want to keep them.
So what debt relief option is right for you? You guessed it – it depends on your circumstances. Our firm focuses exclusively on solving debt problems. Schedule a free 1-on-1 consultation with a qualified attorney today to explore your options and find an affordable way to get in control of your debt.
Frequently Asked Questions:
What is debt relief?
Debt relief is the set of options that are available to someone who is overwhelmed by their financial obligations. It helps you to get on track within your budget. As discussed above, there are a variety of options that might apply depending on circumstances, such as debt settlement, chapter 7 or chapter 13 bankruptcy, or a payment plan.
What is a debt relief agency?
As the term “debt relief agency” is commonly used, a debt relief agency is any entity that provides assistance to get out of debt. The term is also used under the federal bankruptcy code in 11 USC 101(12). Under that definition “The term ‘debt relief agency’ means ‘any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer…’ subject to certain limitations.
How does debt relief work?
The process for debt relief starts with assessment. We evaluate your situation and work with you so that you can determine the option that is in your best interest. From there, depending on what option you elect, we generally get some information from you, and take action to address your debt. The execution process will vary depending on the option you choose.
How does debt relief affect your credit?
For someone who can no longer afford their payments, their credit score will progressively get worse with each month that shows an outstanding balance and another missed payment. Usually, a credit score will get worse during debt relief options; but the goal is to resolve the debt in a way that you no longer owe anything so your credit score can get better again. Credit scores vary significantly based on personal circumstances, but generally we find that consumers are able to recover credit scores to healthy levels around 2 years after the conclusion of the debt resolution. Most clients we work with have the option to purchase a vehicle almost immediately after the debt relief is complete (although may be subject to more aggressive interest rates) and usually can get a credit card within a year. If you’d like to learn more about home mortgage timelines, click here.
How do I get debt relief?
The path to debt relief starts with knowing what option is right for you. With a consultation from an experienced attorney, you can decide whether debt settlement and consolidation, chapter 7 bankruptcy, chapter 13 bankruptcy, or another alternative is appropriate for you, as well as what your expected cost may be. Once you determine your path, we can map out the process to get debt relief.
Debt collectors are harassing me and will not leave me alone. Is there anything I can do?
Especially when you do not have an attorney, Debt collectors know that you likely do not have negotiating experience and probably do not understand bankruptcy and debt relief law. Therefore, if you do not have an attorney, they will use this against you. However, it is important to know that you have rights and when you work with our attorneys, we will help get you out from under the thumb of debt collectors.
What if I want to negotiate with creditors without the help of an attorney?
You are legally allowed to do this if you would like to. You are not required to have the help of a Clearwater, Florida debt relief law firm. However, we believe that we can be a valuable asset to you during this time because we can negotiate with creditors on your behalf and have done so for our clients many times.
When is Debt Settlement Right For You?
When you want debt relief, you may want to learn more about debt settlement. Also known as debt negotiation, this is the process where your attorney can work to not only reduce the total amount you pay on your debt but also allow you to pay it all in one lump sum. If this is not possible, you can speak with your attorney about paying it off in multiple payments, though this is not as common. You may be wondering why a creditor would be eager to settle your debt instead of letting interest continue to increase. The truth is, when you get into debt this bad, most creditors know that you will not be able to dig yourself back out. At that point, interest earned won’t matter if you declare bankruptcy. However, if you and your attorney argue for a settlement, it is better for them to get a lower amount than risk getting nothing if you go bankrupt.
Why doesn’t everyone choose to settle their debt?
Debt settlement is not as simple as asking for a lower payment. You must speak with your attorney candidly when it comes to how you got into this debt. You want to show that you have had a financial hardship that has made it impossible for you to pay your debts.
A debt collector implied that they could arrest me or that they work for the government. What if this isn’t true?
Call us immediately if you have been speaking with a debt collector who has wrongly implied that they work for the government and can arrest you, or someone who has made threatening statements to get you to try and pay your debt off. Debt collectors can get in contact with you to speak about your debt but they cannot make threats and they cannot provide false information to try and get you to pay off your debt.
What else should I look out for when a debt collector calls me?
When a debt collector calls you, they should always identify themselves and which company they are with, they should never physically or verbally threaten you, and they cannot advertise the debt you are in. When you get off the phone with them, you should take notes of anything unusual or suspicious that occurred when you talked with them and speak with your lawyer about the conversation.
How can negotiating my debt help?
When you are wondering if you should have a debt relief lawyer, you may be wondering what the advantages are. Many people who are in debt may think that hiring an attorney to help them is more trouble and cost than it is worth. However, you may find that your debt relief attorney can take a great burden off of you and will be able to help you successfully negotiate with creditors and credit agencies. If you want to learn more about how we can help you with debt relief, contact our office to set up your first appointment. We want to help get you out of debt as quickly as possible so that you can move on with your life.
There are many people who are not in a position in which their debt is so bad that they need to file for bankruptcy to cover it or erase it. In fact, a large portion of people in debt still have jobs but are just barely able to cover their bills and payments every month. This means that while you may not be missing a payment on everything, some bills begin to add up month after month and you are unable to keep your head above water. When this happens, negotiating your debt may be the right option for you. Your attorney can:
- Validate the debt you owe. When it comes to asking you to pay a debt, creditors often have no shame in harassing you or making you feel like you owe more than you do. Your debt relief attorney can make sure that you have the information of the person and company reaching out to you about the debt as well as the precise amount you owe and what the interest rate is.
- Write a cease and desist letter. Your attorney can help stop the collectors from calling and can make sure that future calls go through them, not directly to you.
- Go through the negotiation process. As noted above, the higher your debt is, the more the creditors will want to negotiate your debt. If you get into a place where you are unable to pay and must declare bankruptcy, they will not see the money you owe them. Instead, when your attorney negotiates payment with them, they know they have a higher likelihood of getting paid.
Why are you different from other debt relief agencies?
We are different from other debt relief agencies for a few reasons:
- Debt problem solving is all we do! While you may see some law firms that list out numerous types of law, our focus is exclusively on helping people with debt problems.
- We are a law firm! While many non-lawyer national companies offer debt settlement services, they can’t help you in court, they can’t tell you your legal rights, and they can’t protect you if creditors break the law.
- We look at debt problem solving through many different lenses. Unlike many other law firms, we don’t just file bankruptcy, we also settle debts and we sue lenders in some instances, allowing us to look at each situation from a variety of angles.
Questions? Schedule a complimentary consultation.
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