Most Americans struggle with debt on a day to day basis. Personal loans, car loans, mortgages, student loans, and credit card debt all add up over time. And despite their best intentions, many people dig themselves deeper into debt every year.
According to CNBC, the average American owes approximately $38,000 in personal debt, excluding home mortgages. Debt resolution and bankruptcy are both strategies that can help you pay off debt.
But there are key differences between debt resolution and bankruptcy. Both strategies provide their own set of risks and protections.
What is debt resolution?
Debt resolution, also known as credit settlement or debt negotiation, is a strategy used to negotiate for a lower amount than what you owe. Those who pursue debt resolution can’t afford to pay off all of their debts at once. They also can’t afford to make monthly minimum payments.
A negotiated settlement allows debtors to stop the debt amount from increasing due to rising interest. It also resolves the debt without paying the full amount of it up-front.
Debt resolution can help those in debt save hundreds or even thousands of dollars. It also helps to improve your credit score. However, it should be noted that debt resolution doesn’t guarantee results and creditors can pursue legal action to collect the debt you owe.
What is bankruptcy?
Unlike debt resolution, bankruptcy provides you with legal protection. Bankruptcy is a legal process through which you seek relief from some or all of your debt because you can’t repay them.
Through a bankruptcy filing, you can either reorganize your debt to make it easier to pay off or you can get rid of the debt entirely. You need to file a petition with your local federal court and certify under oath when you file for bankruptcy. You’ll also need to pay the costs associated with filing in court and attorney fees.
Chapter 13 bankruptcies are when you create a debt repayment plan whereas a Chapter 7 bankruptcy is the liquidation chapter. Consider speaking with a bankruptcy attorney Atlanta trusts if you’re unsure which bankruptcy filing is right for you.
Looking for a bankruptcy attorney?
If you’re struggling with debt resolution and bankruptcy, you’re not alone. In fact, between October 2005 and September 2017, there were approximately 12.8 million consumer bankruptcy petitions filed in the federal courts.
Whether you need assistance with debt resolution or legal help filing for Chapter 13 bankruptcy or filing for Chapter 7 bankruptcy, the bankruptcy attorneys of Holston and Huntley can help. For more information, call the law offices of Holston and Huntley today.