Should I try debt settlement instead of bankruptcy?

 

  • Yes, if you have the money to afford it, anything is better than bankruptcy.  You can generally settle out debts for about 40% of what you owe, usually with a lump sum payment up front and a few small payments on the back end.

    The problem is that most of my clients don’t have lump sums of cash to settle out debts, and even if they do, they can settle one debt but all of the others keep coming after them.

    If you do it on your own, you may or  may not get a good 40% number.  If you use an attorney, the 40% is easier to get, but the attorney will charge you 10% of the amount you save.  So, on a $10,000 debt, you settle for $4,000, and then you pay your attorney $600 (10% of the $6,000 you saved).

    All in all, I prefer bankruptcy because it is clean and fairly simple.  But if you have the cash to try to settle, then do so.

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