Debt Consolidation and Credit Counseling vs. Bankruptcy
Bankruptcy Alternatives Have Multiple Downsides
The economic downturn that has swept the country has left more Americans in financial straits than at any other time since the Great Depression. In such conditions, vast numbers of people have fallen behind on the payments of their monthly bills. However, even when confronted with seemingly insolvable financial difficulties, the prospect of declaring bankruptcy is an unsavory notion for lots of hardworking individuals to contemplate.
Quite often, people with debt problems are reluctant to file for bankruptcy because they do not wish to jeopardize their credit scores. Playing off these fears, the last few years have seen a spike in advertisements for businesses pedaling alternatives to bankruptcy like debt settlement and credit counseling. Many consumers have questions about these options.
Most debt relief firms claim that they can significantly reduce a person’s financial obligations by negotiating with creditors to achieve a lump sum settlement. In a similar fashion, credit counseling agencies offer to negotiate with creditors to establish a lower payment or interest rates. But whereas debt relief firms typically work towards achieving a single, lump sum payment, credit counseling agencies usually work towards achieving low monthly payment plans for their clients. If a debtor’s wishes to pursue credit counseling, they should make sure they contact a licensed, not for profit company.
What debt settlement (a/k/a debt consolidation) and credit counseling companies often leave out of their advertising campaigns is that they are unable to provide legal protection to their clients. In addition the following represents significant issues with debt settlement:
- Many creditors do not accept debt settlement terms;
- Creditors may still pursue debt collection against you;
- Creditors may still file legal actions against you;
- Creditors may harass you for payment;
- Agencies may fail to pay your creditors with the money that you have deposited with them;
- Your credit score may continue to plummet while your interest rates continue to go up;
- A 1099 tax form may be issued resulting in tax obligations on the amount of reduced debt;
- The remedies on offer may fail resulting in your being placed in a worse position than before you signed up with a debt settlement or credit counseling agency;
- Debt settlement companies are not regulated and are a leading sources of consumer complaints;
- Debt settlement companies charge sizeable fees and sometimes illegally, charge fees up front;
The Benefits of Filing for Bankruptcy
Finding a New York bankruptcy lawyer and filing for bankruptcy is a legal remedy to help individuals facing financial difficult. During the bankruptcy process, creditors may only communicate with you through your NYC bankruptcy lawyer. Harassing phone calls and any incipient legal actions aimed at collecting money from you are required to cease immediately.
Upon successful completion of the bankruptcy process, eligible debts are either discharged (under Chapter 7) or reorganized into a repayment plan (under Chapter 13) so you are capable of resolving debt problems without future debt worries.
The New York bankruptcy lawyers at the Law Offices of David I. Pankin, P.C. work tirelessly to help our clients make as informed a decision as possible regarding their financial future. If you are interested in learning more about the differences between bankruptcy and debt consolidation or how you can obtain a fresh financial start, contact our office by phone at 888-529-9600 to arrange for a free, initial consultation with one of our NYC bankruptcy lawyers.
Remember,“bankruptcy is not the end, it’s a new beginning.”
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What Our Clients Are Saying
I consulted with Mr. Pankin after hiring a debt consolidation attorney who took my money but did nothing to help me solve my debt problems. I had also consulted with a bankruptcy attorney in Manhattan previously who said I didn t qualify for Chapter 7. I found in David Pankin, a refreshingly honest person, who consulted with me, and took as much time as needed to find out about my situation and whether he could even help me. After the initial consultation, Mr. Pankin called me a day or two later to say he could help me. I can t say how despondent I was prior to contacting David; but after he called me and told me he could help me, I felt like a giant weight had been lifted off of my shoulders. I can t say enough about David and how he helped me solve my debt crisis. I would recommend David s firm in a heartbeat to anyone who s in a financial quagmire and doesn t know where to turn. David pretty much returned my sanity and gave me a second chance at living!!
My experience with the Law Office of David I. Pankin was outstanding. Bankruptcy to me was a very scary and unexpected thing to go through. I had no idea where or how to start and how everything would end. Everyone in that office from Mr. Pankin down was more helpful than I would have ever expected. I was a client with a list of questions that I m sure was longer than most, but none went unanswered. They made me feel comfortable in a tough time, confident that I was going to be ok, and most importantly knowledgeable about every step that we went through along the way. I say the most important thing was the knowledge that Mr. Pankin and everyone in his office gave me because when I came to them with questions they didn t just answer them by telling me things will be fine, they told me why they will be fine and the steps that would take place to answer and solve each of my concerns. I would recommend the Law Office of David I. Pankin to anyone including friends and family. Bankruptcy is not a fun situation to go through, but with the help of Mr. Pankin and his office, you will get the care, knowledge, and support to feel confident and comfortable throughout the entire process. Thank you to Mr. Pankin and your entire staff.
My husband and I were having a lot of problems with our finances. I lost my job of 15 years and my husband s company was downsizing. Things were getting extremely hard to handle. The kids needed essentials and bills were piling up. Initially, we spoke with credit card consultants thinking that was our only option but we were getting nowhere fast. We were in desperate need of help and decided to consult David I Pankin s office. Even through our first meeting, we were assured that there is a light at the end of our dark tunnel. David I Pankin s associates were very courteous and answered all of our questions without hesitation. The necessary documentation they needed to process our case was submitted and they went to work immediately. We are finally breathing a little easier now knowing that we can start our life over with our children and hope for a better future thanks to David I Pankin and associates
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