Los Angeles Debt Relief
Borrowers across the United States are falling behind on their bills and other financial obligations and are facing the threat of foreclosure, repossession, wage garnishment, debt collection lawsuits and other negative consequences as a result. If you are struggling under the burden of mortgage debt, student loans, credit card debt or medical debt, you may be able to reduce your debt and improve your financial situation with the help of a knowledgeable Los Angeles debt settlement attorney. Our lawyers at ibankruptcyattorneys.com have years of experience representing borrowers in Los Angeles and throughout Southern California, and we can review the debt relief options available to you based on your unique financial situation.
Trusted Los Angeles Debt Relief Lawyers
When you find yourself up against a creditor, you are facing an experienced legal team that has seen cases like yours a hundred times before. You don’t want to waste your time attempting to negotiate a debt you can’t afford to pay only to be denied and end up facing collection actions all over again. Instead, you can use that time to contact ibankruptcyattorneys.com to schedule a free initial consultation with our trusted Los Angeles debt relief attorneys. Racking up significant debt doesn’t have to have disastrous results. Long before you have to worry about being sued or losing your home to foreclosure, there are steps you can take to get your debt back on track. Call us today to find out what you can do about your debt and how we can help.
What is Debt Settlement?
Debt settlement, or debt negotiation, is the process of working out an agreement with an individual creditor outside of court to resolve your unpaid debts, usually for significantly less than what you owe. Whether your debt is caused by overspending, unexpected job loss, divorce, illness or the death of a loved one, you may qualify for debt settlement if you have limited income, you are unable to pay your debts in full, you are ineligible for bankruptcy, you are experiencing a financial hardship, you have a number of assets and want to avoid liquidation, or your home is underwater and you can’t afford your second mortgage.
Should I Settle My Debts?
The negative consequences of unpaid debt can be significant and long-lasting. Failing to pay your mortgage loan could lead to your property being seized by the bank. Failing to pay your credit card bill could result in the credit card company initiating a lawsuit against you to collect the outstanding debt. And failing to pay a tax debt you owe to the IRS could trigger a tax lien or tax levy. If you find yourself in any of these situations, your credit score could also suffer, and you will also likely be bombarded by creditor calls and face other negative debt collection actions. The farther behind you fall on your credit card, mortgage or tax debt payments, the more fees and penalties you will incur, and the more difficult it will be for you to catch up. Many borrowers ignore their debt problems, often because they are too busy or too stressed out to figure out what to do about them, and end up defaulting, which can be even more challenging to overcome. If you can’t make payments on time, the best approach is to be proactive and speak to an attorney about what options are available to you for relieving the debt.
Options for Relieving Debt in Los Angeles
If you have significant debt and you find yourself falling behind on your monthly payments, it is easy to feel like your situation is hopeless. On the contrary, there are a number of debt relief options available to borrowers in Los Angeles, including debt settlement. Obviously, if you have debts that you owe, your creditors want you to make regular monthly payments on those debts until they are paid in full, and if you fail to do so, they have the right to initiate collection actions against you. However, foreclosure, repossession, lawsuits and other collection actions are costly and time-consuming for lenders. And if your debts become overwhelming enough that you end up filing for bankruptcy to have them discharged, your creditors could end up getting nothing.
So, if you are unable to keep up with your payments, your creditors may be willing to settle the debts for less than the total amount you owe rather than risk losing it all in bankruptcy. You may not realize it, but depending on your circumstances, you may be able to settle your credit card debt, tax debt or the balance due on your second mortgage loan.
Credit Card Debt
Credit card debt is one of the most common types of consumer debt in the U.S. In California, the average household carries a $9,472 credit card balance, which is slightly higher than the national average of $7,938. Compared to a mortgage loan, which is a secured debt guaranteed by your home, credit card debt is an example of an unsecured debt, which means it is not guaranteed by any kind of collateral or asset. If you have significant credit card debt and you don’t have the means to pay it back, you may be able to reduce the amount you owe by negotiating a settlement with the credit card company. Keep in mind that there is a four-year statute of limitations for most credit card debts in California, which means credit card companies are prohibited from pursuing debtors for past-due debts that are more than four years old.
Owing back taxes to the IRS can be frightening and intimidating. After all, the IRS is a federal agency and it has a reputation for being ruthless in its pursuit of unpaid taxes. And if you can’t afford to make the necessary income tax payments to the IRS, you could find yourself in a complicated situation. Unfortunately, most tax debts are not dischargeable in bankruptcy, which means you will likely have to try working with the IRS to resolve your debts in some other way. The IRS offers several tax settlement programs that may either allow you to pay a lower amount than what you currently owe or give you more time to pay your debts in full, including the following:
- Offer in compromise
- Currently not collectible
- Installment agreement
The California Franchise Tax Board also has several programs for California residents to settle their state tax debts. Speak to our Los Angeles debt settlement attorneys for more information about your tax settlement options in California.
Los Angeles is a great place to live, but it is also expensive. The median home purchase price in L.A. is three times higher than the national average, and many Los Angeles homeowners have taken out a second mortgage on their home to cover the cost of renovations, college tuition, unexpected medical bills or legal fees. A second mortgage, also known as a junior lien, is a home loan secured by the equity in the property. If your property is “underwater” or has “negative equity” (meaning you owe more on the original mortgage loan than the property is worth) and the first mortgage holder forecloses on the property, the second mortgage holder would likely receive nothing in the foreclosure sale.
A second mortgage settlement occurs when the junior lienholder agrees to settle the mortgage debt for less than what the homeowner owes on the loan, release the lien on the property in return for a lump sum payment, and relinquish any claim against the homeowner for the unpaid portion of the loan, known as the deficiency. In many cases, you can settle a second mortgage in Los Angeles for only a small percentage of the outstanding balance on the home loan, which is more than the junior lienholder could hope to get in the event of a foreclosure.
Debt Settlement vs Bankruptcy
If you have a great deal of debt that you can’t afford to repay, bankruptcy is another debt relief option you may be able to pursue. The truth is that bankruptcy carries a certain negative stigma, and many people feel like filing for bankruptcy is irresponsible or even cheating. In reality, seeking financial relief through bankruptcy is your constitutional right and there is no reason you should feel guilty or ashamed about taking control of your debt and improving your financial situation.
- If you qualify for Chapter 7 liquidation bankruptcy, a bankruptcy trustee will sell your nonexempt assets and use the proceeds from the assets to pay your creditors, discharging any remaining unsecured debts, such as credit card debt or medical debt.
- If you have regular income and you can continue making payments on your mortgage loan, a Chapter 13 repayment plan allows you to stop a foreclosure and propose a plan to repay all or a portion of your debts over three to five years.
- If you are a business and you want to keep your business operations going and avoid liquidation, a Chapter 11 bankruptcy enables you to reorganize your debts and repay your creditors over time.
As an alternative to bankruptcy, debt settlement is a good option for resolving your debt, usually for less than what you owe. If you and your attorney decide that debt settlement is the right course of action based on the state of your finances, don’t wait to take action. If you wait too long to contact your creditors, you could compromise your ability to obtain a favorable settlement.
The Power of the Automatic Stay
When weighing the pros and cons of debt settlement vs bankruptcy, you must take into account the power of the automatic stay, a temporary injunction that begins the moment you file your bankruptcy petition with the court. The automatic stay automatically halts actions by creditors and debt collection agencies to collect debts from a debtor who has filed for bankruptcy. That includes relentless phone calls from creditors, wage garnishment, repossession, debt collection lawsuits and foreclosure proceedings. Debtors who qualify for bankruptcy often choose that route in order to take advantage of the temporary reprieve from collection actions that the automatic stay provides.
Do I Need an Attorney?
You can attempt to settle your debts or file for bankruptcy without the assistance of an attorney, but the best way to achieve true, lasting debt relief is to hire an accomplished attorney who can conduct an extensive review of your finances, advise you on the advantages and shortcomings of each available debt relief option, and guide you towards a fair and reasonable solution. Even more importantly, perhaps, your attorney will deal with your creditors on your behalf, freeing you from the stress of receiving harassing, threatening or abusive calls at home or at your workplace. However dire your financial situation may seem, your attorney will be your most important legal advocate and will ensure that your rights and best interests are protected no matter which debt relief path you choose. Our Los Angeles debt settlement attorneys at ibankruptcyattorneys.com have years of experience representing clients in debt negotiations and bankruptcy proceedings in Los Angeles and across Southern California, and we know what creditors are willing to give up. Our reputable legal team will aggressively represent you against your creditors and ensure that you get the most out of your debt negotiation.
Schedule a Free Consultation with Our Debt Relief Attorneys
Bankruptcy is a great option for many people who are drowning in debt, but that doesn’t mean filing for bankruptcy is the best way for you to relieve your debt. Our seasoned debt relief attorneys at ibankruptcyattorneys.com know that no two cases are alike, which is why we strive to offer a customized debt-relief approach that takes into account your unique needs and priorities. Despite what our name may suggest, we aren’t only bankruptcy attorneys; we are legal experts trained to handle a wide range of financial matters for our hardworking Southern California clients. Our legal team is well-versed in the complexities of debt negotiation and we will walk you through every step of the process, so you know exactly what to expect. Whether you opt for a debt settlement, a bankruptcy filing or some other debt-relief strategy, our attorneys will work to see you through to a satisfactory resolution.