A bankruptcy attorney can help with rising debt when the situation becomes overwhelming. Two main methods are used to overcome such financial hurdles: debt settlement or filing for bankruptcy. Here’s a closer look at each option to determine which best suits your needs.

Debt Settlement

Many creditors commonly accept lower monetary amounts to cancel a debt at risk of not getting paid at all. A bankruptcy attorney can negotiate with the company to find a solution that works for both parties. In this case, a lump sum payment is usually requested in exchange for the agreement. However, multiple smaller payments could also be accepted. 

By reducing the total amount paid, a settlement makes it easier to overcome debt. Negotiating a reduced or completely halted interest on the account is also common, which further saves a significant amount of money. 

This arrangement works best for individuals and families with ongoing, reliable incomes and consistent living costs. Additionally, this approach is often more convenient than bankruptcy, as it doesn’t require a court filing.

Bankruptcy

The goal of bankruptcy is to get rid of debt completely. One approach to this method is Chapter 7, which provides a discharge of all approved unsecured debts, like credit cards, in exchange for liquidating any valuable assets. Chapter 13 bankruptcy, on the other hand, compiles the outstanding obligations into a single monthly payment that the court splits between the creditors. 

The repayment process involved with a Chapter 13 bankruptcy takes place over three to five years. At the end of the timeframe, any remaining debt gets discharged. As a result, all assets are safe. Your outstanding balance is also handled without resulting in wage garnishment or property repossession, as bankruptcy law halts both processes. 

Filing for bankruptcy is typically reserved for debtors unable to afford other methods, often due to a job loss or circumstantial change that created financial hardship. A fresh start is the most cost-effective method to overcome debt and prevent further economic challenges. 

If you’re struggling with mounting debt, turn to William A. McWhorter in Pell City, AL, to find a solution that meets your goals. For over 22 years, this local bankruptcy attorney has offered assistance with debt relief and property law to residents throughout St. Clair and Talladega counties. They know each case is different, so they provide a personalized approach to ensure you receive the proper representation. Discover how the firm can help you online or by calling (205) 338-4411.