Posted on Mar 26, 2020

Dolen, Tucker, Tierney & Abraham, A Professional Law Corporation

BANKRUPTCY VS. DEBT SETTLEMENT

WHAT’S WRONG DEBT CONSOLIDATION?
• Your accounts stop getting paid as soon as you start paying the debt consolidation company. This means you are in default and your creditors can:
• Send your debts to collections
• Refuse to settle for less than 100%
• Make every effort to collect 100%
It will take many years of settlement activity before all your debts are resolved.
During this time:
• Your credit rating will never improve.
• You will be paying the company even if they cannot negotiate your accounts
• Nothing stops your creditors

ANY DEBT FORGIVEN MAY BE TAXED
• Your creditors will file a 1099-C with the IRS. You will owe income tax on the amount that was cancelled.

8 WAYS BANKRUPTCY IS BETTER THAN DEBT CONSOLIDATION
1. You do not need creditors’ consent
2. You do not need to negotiate with creditors
3. Your assets are protected to the full extent of the law
4. No judgments, liens, levies, or garnishments can proceed
5. It is faster.
6. There are no income taxes payable
7. Ongoing interest and late charges usually stop while you are in a Chapter 13
8. Your credit score is likely to improve quicker.
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