Los Angeles Debt Settlement Attorney Offers Alternative to Bankruptcy
There are many ways to eliminate crushing debts and collection calls
At the Ghanooni Law Firm we receive calls from folks like you that are in the middle of a debt crisis. Each case is completely unique, as I am sure yours is. We deal with individuals who have only a few thousand dollars of credit card debt, but who have experienced a setback such as being laid off or having hours cut. Now even $3000 in credit card obligations is too much to handle.
At the other end of the spectrum we might hear from a doctor or business owner who has $150,000 in various debts, but due to medical issues or a divorce, they face a credit crisis for the first time in their life.
There is no one size fits all way to deal with these widely diverse circumstances. But the choices do boil down into four basic approaches:
- Chapter 7 bankruptcy
- Chapter 11 bankruptcy
- Chapter 13 bankruptcy
- Debt Settlement
We cover the various types of bankruptcy elsewhere on this website. You may fit into the fourth category, however. Debt settlement is for those who:
- Don’t qualify for bankruptcy
- Prefer not to use bankruptcy
- See settlement is better for them
Debt settlement is not debt consolidation. Debt consolidation means you take out a new loan for the entire amount owed including penalties, and pay the new amount over many years with lots of interest. Some even choose to consolidate in a mortgage where the payments may go over 30 years resulting in paying 3 X the amount owed.
Debt settlement results in you paying off a smaller negotiated amount over 24 – 36 months with no interest. You make one payment each month and checks are sent out to all creditors for you.
Following are the Frequently Asked Questions (FAQ’s) we get about settlement
How much less will I pay?
Every situation is different, but just the saving in interest will be dramatic. Most individuals who are in debt crisis are paying 24% or more in interest. On even $5000 in outstanding debt you would pay $100 per month in interest alone. If that same debt was negotiated to $3600 over three years, the $100 per month would pay off the debt instead of just interest. We commonly do even better than that.
Do you have any guarantees?
Other than a small account set up charge, my fees are only paid based on success. It is very rare that we aren’t able to negotiate a settlement with all of your creditors. But even if we are only successful with almost all, the savings will be substantial.
What will happen to my credit rating?
Your credit rating is probably already in very bad shape. By taking this step, you will show these settlements for seven to ten years. However, we generally see our clients with good credit ratings within 2-4 years if they pay faithfully on the settlement plan, and don’t get into further difficulties.
Will there be any tax consequence?
This is a very complicated situation. The taxing authorities may see the amount you don’t pay as forgiveness. That is a legal term for the fact the creditor has taken a lesser amount than owed. This can be seen as income, but in some cases it is not. You will need to see your tax preparer for the specifics in your case.
Why not use credit counseling? Isn’t it usually free?
Credit counseling may be a very good idea. However, they do not negotiate to reduce your amount owed. Because I am an attorney, I have great leverage with your creditors. In some cases I can threaten bankruptcy unless they are willing to play ball. A lawyer gives you great credibility and power in the negotiation.
Should I just go ahead and do bankruptcy?
Possibly. By using a bankruptcy attorney, you have an advocate in your corner who can advise you on the best possible way to reduce or eliminate your debt.