C. Lee Schwilm Bankruptcy Law Blog on Lawyers.com

Many a times, often due to unforeseen circumstances, individuals find themselves struggling to make monthly payments on ever increasing and overwhelming debt. For some individuals, overspending and living beyond one’s means can be attributed to their current debt situation. For many others, illness, divorce, or loss of employment is the primary cause of the individual’s existing financial strains and stresses. Receiving frequent calls and letters from the debt collectors increase the stress in the difficult situation. Fortunately, there are solutions for those dealing with what seems to be insurmountable debt.

Bankruptcy and debt settlement are two very different options for those involved in a financial crisis. In 2007, US Bankruptcy Courts reported almost 851,000 cases of individuals and businesses filing for bankruptcy. Chapter 7 and Chapter 13 are two types of bankruptcy, and bankruptcy is generally considered to be the best option. A Chapter 7 bankruptcy essentially eliminates an individual’s unsecured debt, and a Chapter 13 bankruptcy sets up a repayment plan over the next 3-5 years to pay off the individual’s debt. Bankruptcy can negatively impact an individual’s credit score as the bankruptcy stays on the credit report for up to 10 years but since most people who file bankruptcy already have bad credit this does not really affect them.

Debt settlement helps to provide individuals with a way to pay off debt but also negatively affects their credit. What the debt settlement companies do is have the consumer quit paying their credit cards and start making payments to the debt settlement companies who take their fees right off the top. The consumer will pay a set amount every month to debt settlement company who will NOT pay the credit cards and use the fact that the credit card is not getting paid to leverage the credit card company to settle the account for about 50%. This only happens once the debt settlement company has been fully paid by the consumer. Oftentimes the credit card company will refuse to settle the account and file bad credit information and also file lawsuits against the consumer who then will do what they should have done in the first place and file a chapter 7 or chapter 13 bankruptcy. In a chapter 7 or even a chapter 13 bankruptcy the most a person will pay back on credit cards is 10% of their total credit card debt. In addition debt management companies fees are unregulated and can end up being extravagant. Bankruptcy fees are set by the Federal Bankruptcy Court and capped to protect consumers. It is advisable to avoid debt
settlement companies if possible.

The Schwilm Law Firm concentrating on bankruptcy in the Charlotte NC area can assist individuals in determining which avenue will best suit their needs and current debt situation. Our bankruptcy lawyer in Charlotte NC, Lee Schwilm helps the clients to determine the extent of their debt problem and find an appropriate solution. Seeking advice and expertise from a qualified professional is recommended prior to making any decisions in regard to debt settlement or bankruptcy. For more details contact our bankruptcy law firm at 704-567-5252.