In a recent article, published by Nerd Wallet, “Debt settlement a bad alternative to bankruptcy” Liz Weston shares debt settlement horror stories. Some of the problems with debt settlement are caused when the debt settlement company doesn’t reveal the full effects of failing to pay a bill or when a debt is discharged without the benefits of Federal laws. For example, Liz Welton indicated consumers didn’t understand the below consequences of debt settlement:
- One woman didn’t realize she would face a tax bill on the forgiven debt.
- A man opted against bankruptcy in part because he erroneously thought he would lose personal possessions.
- Another woman was shocked at how far her credit scores tumbled and how much interest she was charged when she applied for a car loan.”
Liz also clears up a common misconception about bankruptcy versus debt settlement. Although debt settlement companies claim bankruptcy is harder on your credit score than settlement, the truth appears to be the opposite.
While a consumer can start rebuilding their credit months after the bankruptcy petition is filed, debt settlement can take years. When a consumer enters into a debt settlement agreement, they aren’t paying their creditors and often a consumers credit score drops into the 500’s. With delays in reaching a settlement and eliminating the debt, debt negotiation can keep your credit in the 500’s for years.
Make sure you research your options. Meeting with Peter Francis Geraci Law Bankruptcy and Injury attorney is free. We will layout all your options and work with you to help you get debt free.