Getting Debt Settlement Advice in Murfreesboro, TN

Bankruptcy may not be your only option if you have outstanding debt. Even if you’ve maxed all your credit cards and are feeling overwhelmed about paying off all your bills, some for-profit companies (such as credit card companies) offer debt settlement programs to get you back on track. Sometimes these programs have hidden pitfalls, so it’s important to understand all the ins and outs before deciding if a debt settlement option is a good fit for your financial situation as an alternative to filing for bankruptcy. The legal team at Fraley & Laxton Attorneys at Law can help you do just that, so contact us if you’re not sure if you need to file for Chapter 7 or Chapter 13 bankruptcy, or to find another possible financial solution.

A debt settlement is an agreement drafted between a creditor and debtor in which the creditor accepts less than the full outstanding balance but considers the debt paid in full, essentially forgiving part of the total debt or loan amount. The most common types of debts to be settled are unsecured debts (those that aren’t related to an asset, like a car), which can look like credit card debt, store account charges, medical bills, lease defaults, repossession deficiencies, signature loans, overdue utility bills, liens, and even attorney fees. In many cases, in order to be considered for settlement, these accounts must be severely overdue or delinquent, likely to the point where the creditor had already decided to write off the remaining balance as an uncollectible debt and was prepared to lose out on the entire remaining balance.

How does debt settlement work?

To provide a simple example of how this might work and why a company or a debtor would consider debt settlement, imagine Joe owed a local bank $3,000 on his credit card. He has missed payments and doesn’t have the full amount to pay back, although he may still have income from a job or money in the bank. His bank has waited a long time for payment and is preparing to write off the whole $3,000 as a loss, while still aggressively trying to collect the balance by contacting Joe or even pursuing legal action for his unpaid bills. It’s unlikely the bank will receive its money back, but it sure can harm Joe’s credit and finances through legal action.

If Joe negotiates a debt settlement with the bank to pay an amount he can afford, perhaps half of his unpaid balance, then that means the bank accepts the money and considers the debt completely paid. It may negatively affect Joe’s credit, but Joe didn’t go to court and the bank did end up receiving at least part of its outstanding balance (which is better than nothing).

When do debt consolidation or settlements work?

If a creditor believes you have the finances to pay the balance in full, it won’t agree to a debt settlement. Many types of debt cannot be settled this way, so it’s not always an option. And sometimes, companies that do offer debt settlement to their consumers who don’t pay bills use misleading or complex language that makes debt settlement seem 100% safe and risk-free — even when it’s not. A debt settlement doesn’t stop the late fees, collection notices, or potential legal action, so it may not be right for you.

With these types of dangers hidden in the process, what might sound like an easier option than declaring bankruptcy may actually become an even heavier burden to bear when it comes to your credit score and interest rates on your other debts. Before you consider a debt settlement offered by your bank or another creditor where you carry and outstanding balance, it’s strongly recommended you consult with the attorneys at Fraley & Laxton Attorneys at Law. We’ll help you evaluate if debt settlement is a good option in your financial situation, ensuring you fully understand the terms of a possible debt settlement so you aren’t surprised by any part of the contractual agreement down the road.

Ask the experts

Principal partners Will Fraley and Jordan Laxton have years of experience applying the intricacies of U.S. bankruptcy code to every possible personal circumstance. They’re ready to bring all of that knowledge, legal expertise, and deep understanding for the stress of the situation to help you in and out of court. Let Fraley & Laxton Attorneys at Law make your situation feel less hopeless and intimidating by explaining how your situation could be resolved by the many legal options at your disposal.

Contact Fraley & Laxton Attorneys at Law today for debt consolidation assistance.