Many in New Jersey are facing problems with what can feel like overwhelming amounts of debt. However, there is relief in sight. There are a number of options that a person who is facing mounting debt can use to lighten hir or her burden and achieve some measure of debt relief.
One option that many people choose is to settle the debts. Some creditors will agree to accept a one-time, lump sum payment in exchange for canceling the remainder of the debts. An experienced lawyer may be able to handle these negotiations in exchange for a percentage of the canceled debt. The consumer is not required to pay until the debts are settled. However, negotiating the debt can lead to lawsuits if negotiations are unsuccessful, and the consumer may be taxed on any debt that is forgiven.
Another option is to use a nonprofit credit counseling organization. These companies are able to review a person’s entire financial picture, establish a plan for tacking debts and help keep consumers current on their payments. The fees are typically low and can be adjusted to reflect need. However, these companies will close the consumer’s credit cards as part of the process, which can take approximately three to five years.
A consumer with consistent income and significant debt may consider filing for bankruptcy. Chapter 13 bankruptcy consists of a structured repayment plan that is supervised by the courts. Some debts may be discharged entirely. Bankruptcy can help save a home from being foreclosed by creditors, but it will also show up on a person’s credit report for 10 years. Consumers who are facing large amounts of debt may benefit from speaking to an experienced bankruptcy attorney about their available options for relief.
Source: Fox Business, “Choices for Debt Relief,” Fred O. Williams, Feb. 8, 2013