Ever hear those advertisements from companies that claim that they can work with one's creditors in order to settle debts? They make it sound so easy. They also make bankruptcy sound like it is the worst option in the world. The truth is, for many Michigan residents, a bankruptcy law attorney and the protections offered by a bankruptcy filing may be their best bet when it comes to achieving the financial relief desired.
What steers people to debt settlement firms? The promises and the false statements. Having debt amounts cut in half would sound appealing to anyone, as does leaving the negotiating to someone else. However, there is a lot of information that these companies fail to share upfront, such as:
- Time line
- Effect on credit score
- Lack of legal protection from creditors
Bankruptcy may not be the perfect solution for everyone, but it certainly has it benefits over debt settlement. For instance, as soon as a bankruptcy petition is filed, an automatic stay is issued, which forbids creditors from taking actions to collect debts owed. That alone is pretty significant. Fees to file are also less than what debt settlement firms charge and, depending on the type of bankruptcy applied for, debts may be forgiven in just a few short months -- among various other benefits.
Debt settlement firms care most about collecting money. Helping one's financial situation is not their real goal. A bankruptcy law attorney, on the other hand, is in it to find the best solution for the client -- which may or may not be a bankruptcy filing. Before signing one's life away to a debt settlement firm, Michigan residents owe it to themselves to research all of their debt relief options.
Source: southbendtribune.com, "Debt settlement a bad alternative to bankruptcy", Liz Weston, Aug. 30, 2017