Many Florida consumers who can no longer manage their debts are opposed to filing Chapter 7 bankruptcy. As an alternative, these consumers often turn to debt settlement companies. However, for most Floridians who qualify for Chapter 7, filing bankruptcy is probably a better solution. It’s true that bankruptcy does considerable harm to credit scores, but so does debt settlement. Also, for the majority of indebted Florida residents, bankruptcy is actually cheaper than debt settlement.
How Bankruptcy Compares to Debt Settlement for Indebted Florida Consumers
A handful of Floridians struggling with debt will benefit more from debt settlement than Chapter 7 bankruptcy. Yet, by comparing the two options side by side, it’s clear that bankruptcy is a better choice for most Sunshine State residents who need debt relief. Here are the biggest reasons why the majority of indebted Florida consumers should file for Chapter 7 bankruptcy.
1 – Debt settlement usually takes a long time.
While lawyers and creditors settle most Chapter 7 bankruptcy cases in a few months, debt settlement negotiations can take years. Also, in debt settlement, advisors typically tell Florida consumers to stop making payments on their credit cards and loans during negotiation. This makes these consumers vulnerable to fines, lawsuits, and wage garnishments. On the other hand, bankruptcy filers are protected against lawsuits and wage garnishments from creditors and debt collectors.
2 – Debt settlement is normally more expensive than bankruptcy.
Yes, good debt settlement companies usually settle debts for 45% to 50% of the current balance. Yet, they charge consumers, on average, about 20% of the debt total in fees. Then, creditors report forgiven debt to the IRS as taxable income, so debt settlement clients usually receive a large tax bill. No, bankruptcy isn’t exactly cheap, but it’s likely to cost less than debt settlement in the final analysis.
3 – Chapter 7 bankruptcy filers seldom lose property.
The fear of losing personal belongings deters a lot of Florida consumers from filing bankruptcy. However, the truth is that most filers hold on to the majority of their property through government-enforced exemption policies. For example, you can typically keep your house, your car, and other necessary items. Of course, debt settlement companies tell would-be clients a very different story.
4 – Chapter 7 bankruptcy filers recover their credit scores faster.
According to studies, both Chapter 7 bankruptcy and debt settlement cause most credit scores to drop into the mid-500s. Again, though, because Chapter 7 takes months instead of years to complete, filers can normally start the credit recovery process sooner.
The handful of Floridians who should opt for debt settlement over bankruptcy are those who don’t qualify for Chapter 7 bankruptcy. The only alternative bankruptcy type for private individuals is Chapter 13 bankruptcy. This type of filing takes three to five years to complete, and requires filers to enter into a payment plan with creditors. Because of this longer timeframe and the fact that debts are not discharged but reduced in Chapter 13, debt settlement works better for some consumers. Just make sure to work with a reputable debt settlement company. You should also obtain a written contract before making a payment or agreeing to sign on for services.
Why Florida Consumers Should Check their Credit Reports after Chapter 7 Bankruptcy Discharge
For Florida consumers who opt for Chapter 7 bankruptcy, it’s important to check your credit reports after receiving your discharge papers. Creditors often misreport discharged debt, which results in credit report errors and lower credit scores.
Then, if you have post-bankruptcy errors – or any other types of mistakes – on your credit reports, call Credit Repair Lawyers of America in Florida. After contacting our firm, you’ll get the benefit of an experienced credit attorney who will fix your credit reports for free.
How to Get Free, Legal Credit Repair in Florida after Chapter 7 Bankruptcy
Don’t let post-bankruptcy errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (813) 940-7255 or sending him a message through our contact page.