A professional bankruptcy lawyer Phoenix, AZ residents trust understands that many people who are struggling financially are often hesitant to choose bankruptcy as a solution. Instead, many people consult with debt settlement companies, thinking this will solve their financial situation.
How Do Debt Settlement Companies Work?
A seasoned bankruptcy lawyer Phoenix, AZ provides knows that debt settlement companies tell clients that they will be able to significantly lower their debt by allowing the debt settlement company to negotiate settlements with the creditors. Often, the first thing the debt settlement company instructs the client to do is to stop making all payments on any debts they owe.
The client instead gives the money they would have sent to the creditor directly to the settlement company. The settlement company deposits the funds into a special account. The idea is that the money will then be used to pay the creditors. Those funds will also be used to pay the settlement company their fee if they are able to reach an agreement with the creditors. Typically, the feel is a certain percentage of the total amount the clients owes to creditors.
Although this all may sound like a good solution, an experienced bankruptcy lawyer Phoenix, AZ residents recommend knows that if a person stops paying their debt, they are considered in default of that debt. If a client listens to a debt settlement company’s advice and they default on their debts, they may begin incurring additional interest and late fees. At this point, the creditor could also sue the client.
A bankruptcy lawyer in Phoenix, AZ also knows that some creditors make it their policy to not even negotiation with debt settlement companies. If a creditor does negotiate, the guidelines they use are standard, whether they are negotiating with a settlement company or directly with the client. So, a client would be paying the settlement company a fee for something they could have done themselves.
Bankruptcy or Debt Settlement
The difference between bankruptcy and debt settlement may mean the difference between starting fresh or still struggling. A Chapter 7 bankruptcy does not require negotiations and the majority of your debts may be discharged, enabling you to begin to rebuild your credit back up. People who do may not qualify for Chapter 7 may instead qualify for either Chapter 13 or debt resolution. A Phoenix bankruptcy lawyer can explain which option would work best for you based on your circumstances.
Contact a Bankruptcy Lawyer Phoenix, AZ Clients Trust Today
At Kamper Estrada, LLP, we have had clients who went to a debt settlement company first and ended up owing even more money than before. Our firm realizes that this is often a very stressful time in our clients’ lives, and we work with each client toward the best possible outcomes for their situations. Bankruptcy isn’t the perfect solution for everyone, but it might be the ideal solution for your financial struggles.
If you would like to discuss your situation, contact a bankruptcy lawyer Phoenix, AZ community members depend on at 602-230-1234.