Colorado Debt Settlement

Overview of Debt Settlement (The Real Last Resort). Debt settlement is an alternative to bankruptcy.

Debt settlement is a private negotiation between you and your unsecured creditors (typically credit cards or medical bills) whereby you offer a lump sum, or cash payment to pay the debt owed at a reduced amount. Sure, the T.V. ads say they will reduce your debt in half while you make one low monthly payment. However, those payments are just going into an account until there are enough funds to offer a lump sum of cash.

In general, before your creditors will accept a settlement offer, you must stop making payments; that is correct; you must default. The reason is, while your account is in good standing, from the creditors’ perspective, there is no risk of loss. The obvious downside is that defaulting on your payments will negatively impact your credit. Thus, when you see the T.V. ads touting that debt settlement helps you avoid bankruptcy, that is only true in so far as debt settlement is not bankruptcy. Otherwise, both are about as equally damaging to your credit. Have you noticed that the T.V. ads never tell you why it is important to avoid bankruptcy? The reason the ads do not explain this is that there is no meaningful benefit of debt settlement over bankruptcy. The ads are merely counting on the fact that you have not educated yourself about bankruptcy.

However, beware of debt settlement or debt consolidation companies

In my view, debt settlement is the true last resort, not bankruptcy. Debt settlement should only be used in a specific set of circumstances when a bankruptcy does not make sense. In general, debt settlement is a potential option for a person, family, or business that has suffered a long-term setback and needs to unload the baggage of old debt. Also, debt settlement should only be considered if bankruptcy would in some way cost more than settling (which is rarely the case).

For more information on Debt Settlement, download my Free Report; The 7 Truths About Debt Settlement, Why Debt Settlement is the Real Last Resort. 

Contact Denver bankruptcy attorney Matt Berkus today by calling 720-545-0339 to discuss alternative solutions to debt settlement.