Debt Settlement Or Bankruptcy? Which Is Better?

Debt Settlement Or Bankruptcy? Which Is Better?

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Chicago bankruptcy lawyer are frequently asked whether it makes sense to try to settle debts out of bankruptcy. Debt settlement firms claim that they can settle credit card debts for pennies on a dollar. Is there truth to this? Mostly no. Credit card companies are not fools. If you are going to file for bankruptcy and pay them nothing, they would be happy if you pay them something. However, they are not going to make this easy for you. Unless its totally obvious to the credit card companies that you cant pay anything, they wont accept a discount on their claims. And they want cash, all in one lump sum. Unless you get an inheritance or have a rich uncle or rich boyfriend or girlfriend, you wont have enough money to pay what the credit card companies want.

So the debt settlement firms will ask you to pay them a sum of money every month. They will take their fee off the top. And then, they will offer to pay dribs and drabs to the creditors. The problem with this strategy is that interest continues to accrue at a high rate. Moreover, nothing stops the credit card company from suing you, getting a judgment and garnishing your wages. So you pay the debt settlement firm and end up in bankruptcy anyway. This is the worst of all worlds. Thats why both the Federal Trade Commission and the Illinois Attorney Generals office says that most debt settlement programs are scams. A competent Chicago bankruptcy lawyer will advise you about debt settlement plans so that you can make an informed decision.

However the best debt settlement plan is either chapter 7 where youll pay nothing or chapter 13 where youll only pay your disposable income for no more than 5 years whether you pay your debts off in full or not. You wont have to pay any interest in most cases. And you cant be sued as long as you are making regular payments under your plan.

Unfortunately, most of the debt settlement plans spend a fortune on radio and television ads to make you think that there are special government programs requiring banks to accept pennies on a dollar in settlement of debts. This is false. They want you to think that it is foolish to file bankruptcy. Thats false too. Dont take my word for it. Before you decide, confer with a reputable credit counselor designated in your area by the United States Trustee to see whether bankruptcy is right for you. Credit counseling before bankruptcy is cheap and easy never more than $50 and often less. It is mandatory if you are going to file a bankruptcy.

Make your decisions wisely with the help of a competent, experienced, capable, highly rated Chicago bankruptcy attorney with offices in Chicago, Skokie, Waukegan, Kenosha and Milwaukee.

About the Author:
Loopbankruptcy.com is best firm of Bankruptcy Lawyers and Attorney in chicago, which work for debt settlement or debt relief. Call 866.525.3529 for a free consultation with a Bankruptcy Attorney at Lakelaw - Loop Bankruptcy in Chicago, Illinois.



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