For many people struggling with debt, bankruptcy is the best option.
But Orange County Chapter 7 Bankruptcy Lawyer Vincent D. Howard understands that every case is going to be different, and it seems more frequently, people are seeking debt settlement options.
A recent report by the Administrative Office of the U.S. Courts indicates that bankruptcy filings had fallen 14 percent over the last 12 months, ending in June. From June 2011 through June 2012, there were reportedly more than 1.3 million petitions for bankruptcy. Compare that to the year before, when there were more than 1.5 million.
In most cases, the bankruptcies that were filed were for non-business-related debts (so think medical bills, ballooning credit cards, payday loans, etc.). Of those 1.3 million filed in the last year, 1.26 million were filed by individual consumers.
Chapter 7 filings, which constitute the majority of all bankruptcy petitions, dropped by about 16 percent to slightly more than 900,000. Chapter 13 filings, which account for about 30 percent of total bankruptcy filings, fell by about 10 percent, to slightly more than 385,000 for the year.
There are some indications that the decline has to do with slight improvements in the economy and people simply becoming better at saving their money. And while this may indeed be a factor, it's not THE factor.
The truth is, many more people are working to relieve themselves of debt through a debt settlement agreement.
Unlike a bankruptcy, which impacts all your debts and either wipes them out (Chapter 7) or mandates an across-the-board plan to consolidate and repay at a lower rate (Chapter 13), a debt settlement plan allows you to reduce specific debts by working with creditors to accept a lower amount than what you owe, typically in a lump sum.
Generally, a debt settlement will cost you more, but it will look better on your credit and allow you to move forward more quickly. Typically, you can be finished with a debt settlement plan in about 1 to 2 years. With a Chapter 13 bankruptcy repayment plan, it's usually about 5 years or so. A Chapter 7 bankruptcy will wipe away your debts fairly quickly, but the longer-term impact to credit scores is what usually gives people pause.
Debt settlements are often an alternative for people who may not qualify for a Chapter 7 due to income.
The key to a successful debt settlement is finding someone who will play hardball for you in those negotiations.
Unfortunately, there are a lot of shady debt settlement companies out there, many of whom will make unrealistic promises about what they are willing or able to do. They may clamor for a large, upfront payment - but then you never hear from them again.
The smarter option is to hire an experienced debt settlement attorney. That way, at least, you can ask for their success history and know they are bound to the ethical and legal standards of the California and National Bar Associations.
Orange County Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.