A Debt Settlement Attorney in Denver Could be the Solution for You
Although you may be more familiar with the expert bankruptcy attorneys at Wink & Wink for their experience and success in helping clients rebuild their finances through Chapter 7 and 13 bankruptcy, we are also leading attorneys for debt settlement solutions.
Debt settlement refers to a negotiation with your creditors to reduce the amount you owe them. Assisted by an exceptional team of debt settlement attorneys, you may find that your creditors will accept a fraction of what you owe them, thus relieving you of financial stress and helping you off the treadmill of debt repayment to achieve a better financial outlook.
As you decide whether debt settlement is the right fit for you, it is important to distinguish this plan from debt consolidation. Debt settlement should not be confused with debt consolidation, which is – in most cases – an ineffective method of paying down your debts, especially if you are already having difficulty making payments.
What is Debt Consolidation?
Debt consolidation refers to taking out a new loan with the proceeds going to pay other debt you owe from a variety of creditors and turns multiple debts into one loan with a single monthly payment. Debt consolidation loans can lower your monthly payment and potentially reduce the interest rate on your debt. Some people also choose debt consolidation because it simplifies payments – you need only make one per month for your loan’s term.
While this may seem like an appealing option, it may not be practical for you. If you are already struggling to pay your debt, you may not be eligible for a consolidation loan. And even if eligible, you may not be able to afford to repay the new consolidated loan. It is very possible that consolidation will simply leave you with a bill that you’re still unable to pay.
Consider the Following Illustration of a Denver-Area Man Considering Debt Consolidation
A man in his 30s owes money to three credit card companies and two medical bill collection agencies. He is unable to make monthly payments on these, and his creditors are becoming more aggressive in their pursuit of this debt. He is receiving many demanding letters and phone calls.
This man, who is still feeling somewhat hopeful about his ability to pay in the future, is considering consolidating his debt to get a lower monthly payment. He has bought into some of the advertising about debt consolidation online, and he feels – for the moment – somewhat empowered by this advertising.
There are some understandable reasons why: consolidation would help him feel temporarily more secure, as the stress of multiple phone calls from all of his creditors will be replaced with a single bill from a consolidation company. But there’s likely a better way for this man, who is already strapped for cash.
How Our Bankruptcy and Debt Settlement Attorneys in Denver View Debt Consolidation
Our strategic team of bankruptcy and debt settlement attorneys see this scenario a bit differently. One lower monthly payment may sound appealing, but if this man is unable to pay his creditors now, where will he find the money to pay off this consolidation? And if he fails to pay the consolidated loan, his credit problems will be drawn out over an indefinite period of time.
Many people considering debt consolidation fall into this trap, swayed by the promise that they will be able to handle a more streamlined approach to handling debt. However, many of them end up being unable to pay, and they’re back in the same position again, feeling distressed about their financial situation, and worried that there is no clear solution.
There is a Solution with Wink and Wink’s Debt Settlement Expertise
Debt settlement, as opposed to debt consolidation, is a much more strategic and beneficial negotiation, that – with the help of professional debt settlement attorneys – can drastically reduce your debt, while empowering you as an individual as you begin a journey toward a better financial future including a better credit score.
How Debt Settlement Works
Debt settlement essentially allows you to offer a lump sum payment to your creditors as a settlement on all your qualified debts. When you enter into a debt settlement agreement, you may be able to offer 50 percent of your total debt as a lump sum payment to your creditors, who forgive the rest. This is far different, of course, from paying off all of your debt plus interest through consolidation at a lower monthly payment.
But why, you might ask, would a creditor agree to this? Think of it this way: if you are currently not able to pay 100 percent of your debt to creditors, you represent risk. When you stop paying on the debt (which is necessary for settlement), the creditor is currently receiving nothing from you and stands to lose out because they are not collecting payments at all.
In this situation, a creditor is likely to agree to debt settlement, and accept a fraction of what is owed to settle the debt in full. This is a better alternative for the creditor than receiving no payment from you at all. This would be far more beneficial to them, but – keep in mind – you will need the help of a debt settlement attorney to assist you in the negotiations and to protect you from lawsuits should they arise from nonpayment.
Keep the Following Points in Mind When Considering Debt Settlement
- You will need to have a lump sum available to settle the debt. While some people who are in a position to settle their debt might consider offering monthly payments to their creditors, we don’t recommend this. A lump sum settlement is more appealing to creditors because they get more money faster and the settlement represents less risk than if you are back on monthly payments. Furthermore, you can typically settle for less if paid in a lump-sum than if paid over time. Contacting Wink & Wink is a good idea to find out more about the virtues of lump-sum settlements.
- Debt settlement only applies to unsecured debts, or those that are not backed by an asset, such as a mortgage or car payment. Unsecured debts include credit card and medical bill debt, and both can be included in your settlement.
Why You Should Hire a Debt Settlement Attorney to Assist You in Your Settlement
Going it alone when settling your debt presents significant disadvantages. First, it is important to have an expert bankruptcy and debt settlement attorney listen to your situation, as we can then develop a strategy that will be most appealing to your creditors, as well as most beneficial to you.
For instance, timing is very important when opting for debt settlement. A creditor is not going to accept a lump sum payment in the early months of debt collection. However, when you are far enough into default – typically about three months or more of not making payments – you begin to represent risk, making a settlement far more appealing to your creditors.
Much like our advice on avoiding debt consolidation in most cases, these types of strategic legal considerations require the experience of a team of attorneys who have seen clients effectively find debt solutions that can help heal past financial decisions and open up new opportunities for the future.
Look to Wink & Wink, a Superior Team for Denver Bankruptcy and Debt Settlement
Wink & Wink has been helping clients achieve beneficial resolutions to their financial challenges and difficulties since 2009.
When going it alone seems difficult, and your debt seems insurmountable, consider a debt settlement attorney who knows the Colorado legal system, and can put their expertise to work for you.
Wink & Wink’s team is here to listen, offer strategic counsel, and ensure that your financial future looks brighter than ever. Get your free consultation from Wink & Wink today, so we can customize a strategy that will help you achieve debt relief, so you can begin a new chapter in your life.