Many clients ask what options are available besides filing bankruptcy to deal with debt. One option often overlooked is debt negotiation. This can mean many things from payment in full after a set monthly payment plan, lump sum settlement, or some combination of both.
The most important thing to remember is not to overcommit to a monthly payment plan that you cannot afford. That is one of the main reasons I encourage clients to consider a lump sum settlement of something less than the full balance. One big advantage of lump sum payment is that you don’t have to worry about what happens if you can’t make future payment due to job loss or income reduction.
Be aware that lump sum settlement for less than the full amount will usually be reported as settled for less than full value which can damage your credit and often results in a 1099-C from the government for cancellation of debt. A 1099-C basically means you will be taxed on whatever is written off by the creditor. If you would like to discuss debt settlement as a possible path to freedom from growing debt please give our attorneys a call to discuss how we can help.