San Diego Debt Negotiation Services

1. Only an experienced bankruptcy attorney can tell you if you qualify for bankruptcy and if the end result will leave you better off than debt negotiation. The calculations are different for each person.

2. If you are represented by an attorney, debt collectors must contact your attorney and leave you alone. This is not true with debt companies or agencies. If a company sends a "cease and desist" letter to your creditors, your creditors are likely to file collection lawsuits against you, making things worse.

3. Only an attorney can legally prepare a personalized, legally binding debt settlement contract that a creditor who signs the contract must follow. Debt settlement companies cannot legally draft contracts, and creditors can break their verbal promises to debt settlement companies, then sue you.

4. An attorney can sue debt collectors if they have used overly-aggressive collection methods to collect from you. Again, this is not true with debt companies or agencies. Your attorney can also defend you if any creditors file a collection lawsuit. Also, creditors are less likely to file a collection lawsuit if they know you have an attorney.

5. Attorneys have a watchdog agency, the State Bar of California, that helps ensure they act honestly and in the best interests of their clients. A State Bar fund helps reimburse any clients who are the victim of an attorney fraud. There are no such protections if you use a debt settlement company. There is no state fund to reimburse persons harmed by debt settlement company fraud.

Even if you don't use a lawyer, you should think twice before you hire a "debt settlement company" or "debt negotiation agency."

Large numbers of these companies are run by crooks, who will take your money - hundreds or even thousands of dollars - and do nothing for you. Your credit score will be ruined for years to come. You can end up being sued by your creditors, resulting in a judgment against you for the full amount of the debt, plus continuous interest till paid, plus the creditor's attorney fees and court costs. In other words, you can end up much worse off than you were before you hired the company or agency.

1. Tax liability: After bankruptcy, you will no owe taxes on the amount of debt that was wiped out. With debt settlement, you will owe state and federal taxes on the amount of debt that is negotiated away or forgiven, because "forgiven debt" is considered "taxable income."

2. Credit score: A bankruptcy discharge completely wipes out all unpaid credit card debt, and other unsecured debts, such as payday loans. You can then begin rebuilding your credit. With debt settlement, your accounts are paid off but are not reported as paid in full, which means they stay on your credit report, and your credit score will suffer for years.

3. Certainty of wiping out debt: A bankruptcy discharge wipes out unsecured debt (such as credit cards) according to bankruptcy law. Typically, under a Chapter 7 bankruptcy, you will receive a discharge in just 3-6 months and you will not have to pay any unsecured debts. In a Chapter 13 bankruptcy, you will usually pay only a small percentage of your unsecured debts. Under a debt settlement, it will be up to each credit card company as to how much they will take in settlement, and they don't have to settle at all - they can just file a collection lawsuit.