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Alternatives to bankruptcy might not always prove fruitful

On Behalf of | Sep 22, 2022 | Bankruptcy Law

When facing extended periods of monetary strain, many individuals may be left scouring through their options in search of a path for relief that best meets their needs. While bankruptcy may be just the tool with which to pursue debt relief and build a brighter financial future, some individuals in Maryland may wonder if an alternative path could be the most viable option. While options such as debt settlement may seem appealing, this path might not always prove fruitful and may only lead to deeper financial concerns, whereas bankruptcy could help a person pursue a fresh financial start. 

While the idea of consolidating one’s debts into one lump sum payment could appear a favorable path, there may be certain issues to address regarding the debt settlement process, such as: 

  • Lengthy process:  One of the first things to note is that the debt settlement process might not be swift in nature, as negotiations could persist for months or even years before an agreement can be reached. 
  • Settlement payments:  Even if one is able to settle for half the amount owed on debts, with fees and the possibility that amounts forgiven will become taxable income, the overall amount owed could be almost as high as the original number. 
  • Creditor protection:  The debt settlement process may also do little to provide a person with protection against creditors, which is a feature included in bankruptcy via the automatic stay. 

While there may be some scenarios in which debt settlement might be viable, in some cases, bankruptcy could be the best available path with which to pursue relief from the trials of financial unrest. 

With so must at stake, exploring the available options for debt relief and choosing a path that best fits one’s needs can seem a stressful and daunting task. Fortunately, there are attorneys who can evaluate a person’s situation and provide much-needed insight into making informed choices about all the available options. A bankruptcy attorney can help a client in Maryland prepare a strategy to reduce or eliminate debts through the proper channels and begin working toward building a healthier financial future.