Potential Dangers of Debt Consolidation and Debt Settlement
Alternative to Bankruptcy in Queens
When you consider alternatives to bankruptcy like debt consolidation and debt settlement, it is important to make sure they can actually help you get out of debt safely and quickly. These debt relief strategies may have side effects that can set you back instead of helping you move forward.
Dangers of Debt Consolidation
- If you are having trouble paying your bills and go through debt consolidation, you may still have trouble making your monthly consolidated payment.
- Even though your interest rate may be lower, it is possible that it will take you a longer period of time to pay back your debt if you have a long-term payment plan.
- If you pay off your consolidated balance over a long period of time, the amount of interest you pay may be more than you would normally pay in your current financial situation.
Dangers of Debt Settlement
- Debt settlement can hurt your credit score significantly, and you still end up paying off a portion of your debt. While bankruptcy also has an impact on your credit score, most people who are considering bankruptcy have already fallen behind on their payments and are hurting their credit score. In most cases, once a person files for bankruptcy and their debt is discharged from their credit report, their credit score immediately improves by 100-200 points.
- Debt settlement only applies to unsecured loans, so it can’t be used to help you pay off a car loan, mortgage or other type secure loan.
- You will still owe taxes on the debt you settle with creditors; you will need to report it with the IRS as taxable income.
Debt settlement and debt consolidation have certain drawbacks that should be considered when you are looking to get out of debt. However, these debt relief methods can still help individuals depending on their income, the amount of debt, and their ability to pay off debt quickly. A Queens bankruptcy lawyer can show you how these alternatives to bankruptcy can work in your favor or affect you negatively.
Queens Bankruptcy Attorney
Understanding all of your debt relief options is essential, but it is not easy to do this alone, especially when you are also dealing with late payments and creditor calls. The Law Offices of Bruce Feinstein, Esq. are armed with over a decade and a half of quality representation and in-depth knowledge of bankruptcy and bankruptcy alternatives. They can offer one-on-one assistance when you need to make a decision about your debt relief plan, and will stay with you throughout your case. Their goal to is to help you get out of debt, and their successful track record speaks to this dedication.