B. Grant McNutt

If you are struggling with overwhelming debt, you may be considering options like bankruptcy or debt settlement. While both can help you address your debt, they have very different benefits and drawbacks. In this article, I’d like to explain the benefits of bankruptcy over debt settlement and explain why bankruptcy may be the better choice for consumers.

First, let’s define these terms. Bankruptcy is a legal process that allows individuals and businesses to eliminate or restructure their debts. Debt settlement is an agreement between a debtor and a creditor to settle a debt for less than the full amount owed.

Now, Let’s Look At The Benefits Of Bankruptcy:

Automatic stay: When you file for bankruptcy, an automatic stay goes into effect. This means that creditors must stop all collection efforts, including phone calls, letters and lawsuits. This can provide much-needed relief from harassment and give you time to reorganize your finances.

Discharge of debts: Depending on the type of bankruptcy you file, you will be able to discharge most types of debts, such as credit card debt or medical bills. This means that you will no longer be legally responsible for paying those debts.

Fresh start: Bankruptcy allows you to start fresh and rebuild your finances. While bankruptcy can have a negative impact on your credit score, it also provides an opportunity to create a new financial plan and improve your credit over time.

Protection of assets: In most cases, bankruptcy can protect your assets from being seized by creditors. This is particularly true in Chapter 13 bankruptcy, where you can keep your assets while making payments on your debts over time.

Now, Let’s Compare These Benefits To Debt Settlement:

No automatic stay: Debt settlement does not provide the same automatic stay as bankruptcy. Creditors can continue to harass you for payment and even file a lawsuit against you at any point, which can be stressful and make it difficult to focus on your finances.

No discharge of debts: Debt settlement typically only settles a portion of your debt, and you may still be responsible for paying the rest and/or pay taxes on the amount you save. This means that you won’t get the same relief from debt as you would in bankruptcy.

No fresh start: Debt settlement does not provide the same opportunity for a fresh start as bankruptcy. While you may be able to settle your debts for less than the full amount owed, you will still have to pay a significant portion of your debts.

No protection of assets: Debt settlement does not provide the same protection of assets as bankruptcy. Creditors may still be able to seize your assets to pay your debts.

In summary, bankruptcy offers many benefits over debt settlement, including an automatic stay, discharge of

debts, a fresh start and protection of assets. While bankruptcy may have a negative impact on your credit score (debt settlement does as well), it can provide a path to financial stability and a new beginning. If you are considering bankruptcy or debt settlement, it’s important to speak with a qualified bankruptcy attorney who can help you understand your options and make the best decision for your situation.

Bond & Botes Helps People Struggling with Debt

Contact The Bond & Botes Law Offices

We’d love to discuss your finances with you if you have found yourself in one of these scenarios. Debt can be overwhelming. The attorneys here at Bond & Botes provide guidance on helping clients reduce or eliminate debt. We can alleviate your stress! We want to help, and we can help you!

Alabama State Bar requires the following: “No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.” 

Bond, Botes, Sykstus, Tanner & McNutt, P.C.

Web: www.bondnbotes.com

Facebook: facebook.com/Bond-Botes-Sykstus-Tanner-McNutt-PC-203986783117475/

102 South Court St, Suite 314, Florence, AL 35630

Phone: 256-760-1010 • Fax: 256-760-1023

Office Hours: Monday – Friday • 8am to 5pm

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.