Debt Settlement Attorneys

Debt settlement is a complicated endeavor that requires skill and perseverance in negotiation. The more complicated and desperate your financial situation is, the more likely that you might need some legal advice to help you with major accounts in default.

Attorneys can provide the type of legal advice that other consultants or credit repair companies cannot provide. There are various considerations that you need to understand when considering debt settlement.

An attorney may be able to negotiate settlements with your major creditors on your behalf. For this service, they may charge an up-front retainer, a monthly fee or a percentage of the savings.

Your debt settlement attorney can discuss the possibility of an additional income tax liability that may result from a settled debt. Forgiven debt is normally classified as a form of income similar to a gift, and as such it is taxable as additional income. This can raise your income tax liability by thousands of dollars!

One consideration about the taxation of forgiven debt is that you may not have to pay taxes on all or a portion of that debt if you can prove that you are insolvent. Again, you will likely need the advice of your attorney to determine if this applies to you.

Bankruptcy attorneys can evaluate your financial condition to see whether debt settlement is even a viable solution. They may suggest a strategy for negotiating payoffs, or they may advise that bankruptcy is a better solution. Attorneys can discuss the difference between a Chapter 7 bankruptcy (liquidation) and a Chapter 13 bankruptcy (reorganization).

Many debt settlement companies suggest that they use attorneys to negotiate your debts for you. However, most of these companies rarely employ the services of attorneys for this purpose. Instead, you may wish to locate a law office that specializes in debt settlement. You may find that the fees are similar, but the representation is better.