If you are struggling with debt and searching for a way out, it’s a good idea to explore your options. You no doubt have heard or seen ads for debt consolidation services promising to significantly lower your debt by working with your creditors. We urge you to use caution before you contact one of these services because they often overpromise on what they can realistically deliver. At Padgett and Robertson, we will help you explore all of the debt relief options available to you. While we are a bankruptcy firm serving clients throughout Southern Alabama, we’ll never push our clients to pursue bankruptcy if we don’t believe it is the best choice. Our attorneys are committed to helping clients in Mobile and Baldwin Counties resolve their debt problems, which often involves avoiding worthless debt consolidation services. Contact our office today for a free consultation. Most people who are struggling with debt have trouble with multiple creditors. In other words, you might owe money to different credit card companies, medical providers, and lenders. These creditors charge varying interest rates, and the bills come due at different times of the month, making on-time bill payment challenging at best. Debt consolidation allows you to put all of your debts together so that you only make a single payment that is distributed to all of your creditors. Assuming you work with a credible company for this service, the theory is that you will have a lower payment and interest rate. Unfortunately, this rarely works as advertised. The companies that sell these services ask you to stop paying your debts, which will destroy what is left of your credit rating. Not only does the process take a long time, but you can also end up in more debt than before with tax consequences and penalties from creditors. Creditors don’t have much incentive to negotiate, and you’re likely to find that your payments are about the same as they were before. Further, you don’t have any legal protection with debt consolidation, meaning a creditor still has the right to sue you and pursue you relentlessly for individual payments if they choose. Another reason to be cautious of debt consolidation services is that some require you to pledge a vehicle or even your home as collateral. If you fail to make your monthly payments, you could lose these valuable assets. Finally, even if you get a slightly lower payment through debt consolidation, you might get it because the program extends your repayment period, ultimately costing you more money. People get into trouble with debt for an endless number of reasons. Job losses, health issues, and just simple mistakes shouldn’t have to cripple you for years or decades to come. In some cases, your attorney can negotiate a better deal with a creditor. Debt settlement is also known as debt reduction or debt negotiation. With this approach, our attorneys are skilled at negotiating with creditors to lower or settle your debt for less than you currently owe. Some of the types of debt that are eligible for settlement include: If a creditor agrees to partial payment of a debt, that debt will be settled and considered paid in full. What consumers need to understand is that creditors will generally want a lump sum payment immediately, which isn’t feasible for most people experiencing financial troubles. Despite the fact that many debt relief companies claim to be able to help you pay off all debts, the fact is that a large number of banks and lenders refuse to work with debt relief companies. This means that many major credit lenders such as Chase or American Express will refuse to work out any type of repayment arrangement or settlement agreement with the debt relief company you are working with. Many people are not prepared for the way that debt relief companies do business. In order for the debt relief company to work with you, they will require you to pay into an account that they control. You may be required to make a regular monthly deposit into the account, assuming that these payments are being used to re-pay your creditors. But this may not be the case. Chapter 13 bankruptcy is a common form of debt consolidation that anyone with debt issues may wish to consider. There’s a common misconception that consumers have to pay back all of their debt with this type of bankruptcy. This isn’t the case. The truth is that you can have substantially lower consolidated payments each month with Chapter 13 bankruptcy and will have a significant portion of your debt discharged once the program is complete. Unlike other forms of debt consolidation, bankruptcy requires that creditors stop all collection activities immediately. As soon as you file, you get what is called an “automatic stay,” which prohibits creditors from making harassing phone calls, sending threatening letters, or taking actions such as repossessing property or garnishing wages. In a Chapter 13 or reorganization bankruptcy, your creditors are required to participate in the court-approved repayment plan. A single monthly payment is made to the bankruptcy trustee, who is in charge of disbursing money to various creditors. Those affordable payments will continue for three to five years. Once you complete the terms of your bankruptcy without missing any payments, the remainder of your eligible debts will be discharged, giving you a fresh financial start. Chapter 7 bankruptcy isn’t the same thing as debt consolidation. But it might be worth considering if your debt issues are extreme in nature. Provided you qualify by meeting the means test, you have the opportunity to immediately wipe a large portion of your debt clean. In Chapter 7, you can discharge various debts such as credit card bills, personal loans, and medical debt. The Bankruptcy Code also offers numerous exemptions that allow you to hold onto property such as your primary residence, vehicle, and many belongings. And, unlike with those debt consolidation plans, you get an automatic stay, which stops collection activity instantly. When you’re drowning in debt, it can impact you physically and emotionally, making it tough to know which way to turn for help. Not every solution is a good fit for every person that has a debt issue, which is why you need to speak with a debt relief law firm that will protect your interests. At Padgett and Robertson, we’ll never pressure you to engage our services when it isn’t necessary. What we will do is offer you the information you need to make informed choices about your financial health and future. If bankruptcy is the best course of action, we’ll tell you and outline your options. Call us today at (251) 342-0264 or contact us online to schedule a free consultation.Mobile, Alabama Debt Consolidation Attorneys
What is Debt Consolidation?
Debt Settlement as an Option
Many Major Lenders Refuse to Work with Debt Relief Companies
You Are Required to Pay into a Debt Relief Company Account
Chapter 13 Bankruptcy as a Form of Debt Consolidation
How Chapter 7 Bankruptcy Can Discharge Your Debt
How an Experienced Mobile, Alabama Debt Relief Attorney Can Help
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4317 Downtowner Loop N.
Mobile, AL 36609
Toll Free: (800) 303-1416
Phone: (251) 342-0264
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Alabama State Bar Association Regulations require the following: “No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.” 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: “We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”