Debt settlement can be the right solution in certain situations.  Its a matter of knowing when its appropriate and how to do it effectively.

I’m not talking about the typical debt-relief advertisements you hear on radio and television.  You know the ones.   They instruct you to stop paying your bills and send them your money instead.  Usually to some address outside of Rhode Island.

After starving your creditors for 6+ months, the theory is that there should be a pool of money big enough to offer settlements to your desperate creditors.

These programs usually fail because they are not a good fit for most people drowning in debt.  If you owe a lot of money and are dealing with too many creditors, it isn’t likely that everyone will agree to negotiate.

Will you be satisfied if you can only settle some of your accounts, while the remaining debt is unpayable?  You might create a tax liability on the forgiven debt, and a possible lawsuit on the unpaid debt.

To make matters worse, debt settlement companies are paid-in-full long before you realize its a losing battle.  You could waste thousands of dollars and be left with a problem that still requires filing bankruptcy.

So when does debt settlement make sense?  Answer:  When you have a pile of money, under your own control, that can be used to offer lump sum settlements.

Effective debt settlement works best when you have cash in hand and can afford to pay income tax on the amount of debt forgiven.  Money talks.

A few times each year, I encounter such a person.  Someone who has immediate access to money, but wants to pay as little as possible to settle old credit accounts.  If this describes you, I can help.

I had a client who owed $ 60,000 in old debt and now could afford to pay the debt in full.  Wanting to avoid the interest and penalties that accumulated over many years, he asked me to contact each creditor and settle for the smallest amount possible.  I negotiated settlement for less than $ 8,000 and he was more than happy to pay the income tax owed.

If bankruptcy is avoidable,  and you have the money to make it work, a debt settlement may be an option to consider.

As your debt settlement lawyer, I can be the go-between to negotiate a low settlement.  I can explain that unless we receive a good offer, the creditor will likely get nothing in a bankruptcy.