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Why bankruptcy is usually preferable to debt settlement

On Behalf of | Sep 22, 2017 | Bankruptcy, Firm News

Debt settlement services have become much more regulated over the last few years. They gained a bad reputation for charging excruciating amounts to help clients repay and settle their debts, but often they failed in their efforts. These days, debt settlement companies are of a much higher quality and provide a more reputable service to their clients.

This blog will provide a brief overview of what debt settlement is, and the advantages that bankruptcy usually has for debtors.

The debt settlement industry markets itself well, and tries to convince customers that they will make things easy and simple for them, relieving them of their worry. However, this is not always the case.

First, the negotiations that customers might expect to be immediate might in reality take three to four years, as reported by the biggest debt settlement company, Freedom Financial Network. There is also a reasonable risk that the debtor might face being sued for stopping the repayment of their debts in this time.

Second, the fee that the debt settlement company charges is usually around 20 percent of the original amount of debt. When the debt accumulates over the years, as well as taking into account late fees, a client might not actually save much money over the entire process.

Bankruptcy tends to be trash-talked by these companies. Therefore, many people think that filing for bankruptcy will lead to the loss of some of their most valued assets. In actual fact, filing for Chapter 7 bankruptcy often results in resolving debts in three to six months, and assets are usually protected by the state.  If you would like to talk to a Quinn Law Firm attorney that specializes in bankruptcy, contact us at 814-806-2518 for a free consultation.

Source: Nerd wallet, “Debt settlement still lousy option,” accessed Sep. 15, 2017

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