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Debt settlement is not a replacement for bankruptcy

Virginia residents with credit card debt may be looking for the best way to deal with these obligations. While debt settlement is one option, it is important that people consider all the facts before choosing that alternative. Debt settlement can have a negative effect on the credit score and financial future of the consumer, and not all consumers who use this option are aware of this fact until they have already contracted for these types of services.

The truth about debt settlement is that even after paying off their obligations, consumers will still have to work with a poor credit score. This means that when they try to get loans for large purchases in the future, they could be charged higher interest rates, and it could take years to bring their credit score up.

Debt settlement companies often advertise their services as superior to bankruptcy because they say that bankruptcy eventually leads to even lower credit scores than debt settlement does. Companies that offer the service might also say that filing bankruptcy means losing possessions. In reality, filing for Chapter 7 bankruptcy has about the same effect on credit scores as debt settlement, and it is often possible to raise credit scores even sooner after paying off debt than in the case of debt settlement. Furthermore, many assets are exempt from Chapter 7 liquidation under federal or state law.

When consumers are wondering what to do about their credit card debt, they might want to meet with an attorney. There are a variety of forms of debt relief that might be available and that the attorney can explain in detail.

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Bowen Ten Cardani, PC

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