Frequently Asked Questions About Debt Settlement

For anyone who is struggling with debt, the options to manage their debt or to get a fresh start can be vague or confusing. Many consumers do not know if they are eligible for certain processes like debt settlement, for example. If you are considering debt settlement, we know you have many questions. Finding the correct answers to questions you want to ask is not always easy, especially concerning certain complex processes. Our Lilburn debt settlement attorneys are here to help. The following are some frequently asked questions about debt settlement, along with our answers. This is general information to help when questions arise. If you have specific questions about your situation, it is important to seek legal advice.

Q: Is Debt Settlement Different from Bankruptcy? 

A: Yes, debt settlement is different from bankruptcy. Both are forms of debt relief, but they are very different from one another. Bankruptcy is a specific process for either liquidating assets and receiving a debt discharge or reorganizing debt through a lengthy repayment plan. Differently, debt settlement involves negotiating with your creditors to settle any debt you owe for a sum of less than what you owe. In exchange for your agreement to pay a percentage of what you owe, the creditor agrees to forgive remaining debt.

Q: Can I Settle Multiple Debts with Different Creditors? 

A: Yes, you can settle debts with more than one creditor and with different creditors. Depending on the circumstances and the specific creditors, this will likely involve paying different sums up front to the creditors in order to have your debt settled.

Q: How Much Does the Debtor Pay for a Debt Settlement? 

A: The amount negotiated in a debt settlement will depend entirely on the amount you owe, and the amount for which the creditor is willing to settle.

Q: Can Any Type of Debt Get Settled? 

A: Most types of debt can be settled. For example, credit card companies often enter into debt settlement agreements with consumers. You may also be able to settle debts associated with personal loans and other lines of credit, as well as medical debt.

Q: How Will Debt Settlement Impact My Credit? 

A: Debt settlement will have a negative impact on your credit initially, but you can begin rebuilding your credit as soon as you have completed the debt settlement process. It is also important to know that debt settlement has less of an impact on your credit than bankruptcy does.

Q: Are There Tax Implications for Debt Settlement?

 A: There are tax implications for debt settlement. Any amount of debt forgiven is taxable. In short, the IRS treats that forgiven debt like income, and you must pay income taxes on it.

Contact a Lilburn Debt Settlement Lawyer 

Do you have specific questions about debt settlement in relation to your financial circumstances? You can get the answers you need by seeking legal advice from a lawyer who regularly handles debt settlement for consumers. Do not hesitate to get in touch with an experienced Georgia debt settlement attorney at Konn Law Firm LLC. We can answer any questions you have today, and we can discuss debt settlement options with you based on your particular circumstances. Contact us today for additional information.

Sources:

cbsnews.com/news/important-facts-to-know-about-debt-settlement-according-to-experts/

irs.gov/taxtopics/tc431#:~:text=In%20general%2C%20if%20your%20debt,in%20which%20the%20cancellation%20occurred