Usually, it is incorrectly assumed that if you have debt it must be because you‘ve got a spending problem. Most of the time, this assumption could not be more wrong. In actuality, most debt is a by-product of some sort of a medical issue. Medical expenses due to injury or illness not covered by insurance; or perhaps being let go from a job due to missing extended periods of work because of an illness or injury. This will kick off a chain reaction where you end up being very behind on your bills.

I have had clients who have not had a single penny of credit card debt. We have also seen clients who have had only credit card debt and yet have no flashy new things to show off. How can that be? This is usually because they had no choice but to live on their credit cards.  Loss of employment, divorce, illness, or injury or some combination thereof put them in a place where a credit card was their only option.

Debt Settlement is an option but not a very great one because it is really just a short-term solution that only handles one debt at a time with some pretty painful consequences. You may be able to settle your Emergency Room bill but your individual credit card companies flat out will work with you.

Meanwhile, Bankruptcy addresses all your debts in some way. It can actually wipe out most, if not all, of your debt. Any debts forgiven in Bankruptcy are not considered income and therefore you do not have to pay taxes on it as you would in a debt settlement.  In Bankruptcy, your creditors do not have the option or the right to refrain from working with you whereas creditors have the right to demand full payment pursuant to the terms of your loan/credit card agreement.  Depending what Chapter [Difference Between Chapter 7 & 13] you decide to file, you have the potential ability to walk away from your debts a fraction of what you owe.

Bankruptcy, however, is not without its own drawback. One such drawback is that it will also hurt your credit score.

If you are interested in finding out more about Debt Settlement and Bankruptcy and also want to learn which one would be best for you, call RS Law to schedule a free consultation!