Debt Settlement Lawyers in Jacksonville FL
At Gahanian Law, PA, we can help you make sure your legal rights are protected while negotiating a payment plan with creditors. We will attend the hearing, if one is scheduled, and file the appropriate documents with the court to protect your rights. We negotiate payment plans with creditors and ensure that the lawsuit is resolved within the legal framework. All for a low one time fee. Call to schedule a free consultation.
If you have recently been sued by a creditor, or if you’re struggling with debt, it’s time to discuss your options with a Jacksonville FL debt settlement lawyer. Many people don’t understand exactly how debt settlement works or its implications. Below we explain the essentials of this important debt relief option — and how it could help you get a fresh financial start.
How Does Debt Settlement Work?
Your debt settlement lawyer may be able to negotiate a deal with some of your creditors. The process is also referred to as debt reduction or negotiation. Typically, your attorney and the credit card company (or another creditor) will try to make a deal where everyone benefits — the company gets some of their money, and you may get a reduced balance, lower interest rate, or more time to pay the debt.
Typically, debt settlements involve unsecured debts, such as:
- Credit cards
- Medical bills
- Personal and business loans
- Residential and other leases
- Utility and phone bills
Debt negotiation typically is not an option for secured loans, like auto loans and mortgages, or public student loan debt. However, a debt settlement lawyer can help you identify other programs and debt relief options for these obligations.
Many times, your attorney will suggest that you stop making payments on the loans at issue while they negotiate a deal. Once your lawyer and the creditor arrive at an agreement, you’ll typically make a lump sum or installment payment to the creditor. Attorney’s fees typically will cost you less than the value of your unpaid debt. Once you make your payments, the debt at issue is considered paid in full.
Pros and Cons of Debt Settlement
While debt settlement is a powerful debt relief tool, it does have both advantages and disadvantages. Before you decide to negotiate a debt, it’s in your best interest to review and consider these pros and cons with an experienced debt settlement lawyer.
Pro: You May Pay Less Than the Full Amount of Your Debt
The most obvious benefit to a successful debt settlement is the fact that you’ll pay less than the full amount of your debt. While every debt relief case is different, your attorney may be able to negotiate as much as 30- 80% reduction in your unsecured loans. Because your circumstances and debt burden are unique, it’s always best to consult with an experienced debt relief lawyer to get a detailed assessment of your chances at a high-value debt settlement.
Pro: A Successful Debt Settlement Helps You Get a Fresh Start
Debt is overwhelming and can lead to sleepless nights and unwanted harassment from creditors. A successful debt settlement can help you resolve your unpaid bills, stop the phone calls and letters, and put you back on the path towards financial stability.
Con: You Will Have to Report Your Debt Settlement as Income to the IRS
The most significant disadvantage to debt negotiation is that the IRS will consider your settlement as income. For example, if you had $50,000 in private student loans and your attorney negotiates this number down to $30,000, the IRS will consider the $20,000 reduction as personal income. Depending on your circumstances, you may owe income taxes on that money.
When you enter a debt settlement, the creditor will send you a 1099-C tax form that outlines the amount of debt it waived. If you are insolvent (as defined by the IRS) you will not have to pay taxes on that money. If you have questions about your potential tax burden, you should consult with a licensed tax professional.
Con: Debt Settlement Will Impact Your Credit Score
When you enter a debt settlement, your settlement payment will be reported to the credit bureaus. When you look at your credit report, instead of being marked “Paid in Full,” the account will show “Settled” or “Paid: Settled.” While this designation is better than a charged-off account or a pending law suit, it still can have a negative impact on your credit score.
However, if you are considering debt settlement, your credit score may already be seriously damaged. And a debt settlement is still less damaging to your credit score than a bankruptcy or defaulted loan.
Watch Out for Debt Settlement Scams
The Federal Trade Commission (FTC) has reported an increase in debt settlement scams and encourage anyone considering debt negotiation to be very cautious when hiring a debt settlement company. Some companies make promises that are deceptive or false. For example, be wary of any debt relief company or debt settlement lawyer that promises that they will reduce your loans. While we do our best to resolve our clients’ debts for less than the full value, we can never guarantee that result. Anyone who tries to make that promise is being less than honest.
You should avoid doing business with a debt settlement company that does any of the following, since they are unethical or illegal practices:
- The company tries to collects its fees before you settle your debt
- Promises that it can make your debts disappear
- Does not explain the risks associated with debt settlement
- Claims that it always settles its clients’ debts for “pennies on the dollar”
- Makes unsupported claims about new government programs or offers addressing credit card or personal loan debt.
- PAYS ONE CARD AT A TIME. This often leads to the other creditors filing a law suit since they have not been paid in years.
If you were a victim of a debt settlement scam, you should contact the FTC and an experienced Jacksonville FL debt settlement lawyer.
When you work with Gahanian Law, you can rest assured that we will carefully follow the law and ethically guide you through the negotiation process. We take pride in our client experience and do our very best to educate our clients about all the advantages and disadvantages associated with debt relief.
Request a Consultation with a Jacksonville FL Debt Settlement Lawyer
Our team will listen to your story, educate you about your legal options, and suggest practical next steps. To learn more about how we can help, contact Gahanian Law, PA today. All initial consultations are free and confidential.