Falling behind on your payments and accumulating debt that you can’t afford to pay is a frightening thought, especially if you could end up facing foreclosure, repossession of your property, wage garnishment or a debt collection lawsuit. If you are facing significant financial difficulties due to credit card debt, medical bills and other overwhelming debt, you probably don’t realize that many of your creditors may be willing to settle your debt for only a percentage of what you owe. With debt settlement, obtaining real debt relief is a possibility for many debtors in Los Angeles, and the key to a successful debt settlement is being proactive and retaining an attorney with significant debt settlement experience who will protect your rights and represent your best interests throughout the debt relief process. Together, our debt relief attorneys at Resnik Hayes Moradi LLP have more than 50 years of legal experience and we know what it takes to negotiate a successful debt settlement agreement. Contact our bankruptcy and debt relief firm today to discuss your options with our qualified and compassionate attorneys.
Affordable Los Angeles Debt Relief Attorneys
When it comes to resolving overwhelming debt in Los Angeles, bankruptcy can be a fast and effective approach, but that doesn’t necessarily mean bankruptcy is the best solution for everyone. There are other alternatives to bankruptcy that work better for some individuals struggling with overwhelming credit card debt, past-due mortgage payments or tax debts they can’t afford to pay, and it is our primary goal at Resnik Hayes Moradi LLP to present these clients with a debt relief solution customized to their specific financial situation. In today’s financially distressed economy, many creditors are willing to work with debtors to reach an equitable settlement agreement to resolve unpaid debts once and for all, rather than risk a bankruptcy filing, in which case the debt could be discharged completely, leaving the creditor with nothing. When considering debt settlement as an alternative to bankruptcy, it is imperative that you contact a knowledgeable debt relief attorney with experience handling such cases in Los Angeles and the surrounding area, so you can understand all of the debt relief options available to you and maximize your settlement. Schedule a free initial consultation with our debt relief attorneys at Resnik Hayes Moradi LLP to find the debt relief solution that best meets your financial needs.
What is Debt Settlement?
Debt settlement is a process by which a debtor and creditor come to an agreement on a payment plan to repay an outstanding debt, usually for only a portion of the total amount due on the loan, and the creditor accepts that the payment satisfies the debt, thereby releasing any claim against the debtor for payment in the future. By attempting to resolve an unpaid debt with a creditor outside of court, you may be able to reach a settlement that is lower than the outstanding debt on the loan.
Debt Relief Options in Los Angeles
Remember that when attempting to settle your debts with creditors in Los Angeles, you do have some leverage. Foreclosure on your home, repossession, and other debt collection actions are expensive and time-consuming for creditors, and if you can’t afford to pay your debts and decide to file for bankruptcy instead, your creditors could end up with nothing. The same is true for a junior lien holder if you have a second mortgage on your property and the first mortgage lender forecloses on the property because you have defaulted on your loan. Using these facts as leverage, you may be able to convince your creditors that settling your debts is the best-case scenario and the only way they can collect at least part of the debts they are owed.
Credit Card Debt
If you have a great deal of credit card debt and you don’t have the means to pay it back, one option for relieving the debt is negotiating an affordable debt settlement agreement with the credit card company. There is a four-year statute of limitations on credit card debt in California, which means credit card companies only have four years to sue you for payment on an unpaid debt. However, even after the statute of limitations for a debt collection lawsuit has expired, the credit card company can still pursue collection actions against you, including calling you and sending you collection letters, and the delinquent debt will remain on your credit report for years, which is why many individuals with significant credit card debt consider settlement as a means of resolving their debt.
Second Mortgage Settlement
A second mortgage, also known as a junior lien, is another loan taken out on a property that is already mortgaged. Second mortgage settlement occurs when a mortgage lender agrees to accept less money than the homeowner currently owes on the loan, and in return for a lump sum payment, removes the junior lien on the property and relinquishes its right to pursue future payment for the unpaid portion. By negotiating a settlement agreement with the lender, you can have the second mortgage on your property released for only a small percentage of the outstanding balance on the loan. Mortgage lenders in Los Angeles may agree to a second mortgage settlement if the property in question is “underwater” or has “negative equity,” meaning the home is worth less than what is owed on the mortgage. If this is the case and the first mortgage lender forecloses on the property, the junior lien holder risks losing everything, as there would likely not be enough funds to pay off even the first mortgage lender.
Most recent tax debts are not dischargeable in bankruptcy, so if you are struggling to pay income tax debts you owe the IRS because of financial hardship, a tax settlement method, known as “Offer in Compromise”, could be a good option for you. Much like a credit card settlement, the Offer in Compromise (OIC) process allows financially distressed individuals who don’t have the income or assets to pay their tax liability to pay a portion of the amount they owe to the IRS. There are strict eligibility requirements for the OIC program, so if you are considering a tax settlement, it is a good idea to consult a knowledgeable Los Angeles tax settlement attorney to determine whether you qualify.
Is Debt Relief Right for Me?
So many people in California and across the country have found themselves in financial trouble due to the challenging economy and are now struggling under the burden of student loans, credit card debt, foreclosures, and second mortgages, among other types of debt they can’t afford to pay. For many of those struggling with overwhelming debt, a bankruptcy filing is the best way to eliminate or reduce their debts and resolve their persistent financial issues, but there are many cases in which settling debt is a better solution. Debt settlement could be the right solution for you if:
- You have low income
- You aren’t able to pay the outstanding debt in full
- You are struggling with a financial hardship
- You are not eligible for bankruptcy due to a previous recent bankruptcy filing
- You have a number of assets and want to avoid liquidation
- You want to pay off some of your creditors, but not others
- Your home is underwater and your second mortgage is past due
You may think that most creditors would be wholly against debt settlement since it usually means they receive less than they are owed, but negotiating a settlement actually benefits creditors, too. This is especially true when the alternative to settling the debt is receiving no payment at all, which could end up being the case if you file for bankruptcy and have the debt discharged.
Pros and Cons of Debt Settlement
Like any other form of debt relief, there are certain consequences associated with debt settlement that you should be aware of. A credit card or tax settlement will remain on your credit report for up to seven years, but it will have less of an impact as time goes by, especially once you make positive steps towards rebuilding your credit. Debt settlement can also be a lengthy process, since you will have to save up enough money to make the agreed-upon lump sum payment to each creditor, and certain creditors may be difficult to negotiate with and will take their time agreeing to the settlement. The debt settlement process also does not provide protection against debt collection lawsuits, which means while you are attempting to negotiate with your creditors, you could be sued for payment. Finally, any debt that is “canceled” by your creditors may be considered taxable income by the IRS, which means you could end up paying taxes on the amount your creditors forgive. Potential disadvantages aside, there are also important benefits to debt settlement that could make this the right option for you. For instance, debt settlement is a better alternative to bankruptcy for some debtors because with a settlement, they can avoid liquidating their assets to pay back their creditors and they usually won’t have to pay the debts they owe in full.
Why Hire an Attorney?
The amount you end up settling your debt for depends on a number of factors, one of the most important being your attorney’s negotiating skills. If you are planning to contact your creditors and negotiate a debt settlement, it is important that you act quickly to retain an attorney who can initiate the debt settlement process and help you develop a settlement plan. When you retain our firm, we will conduct a thorough analysis of your financial situation in order to familiarize ourselves with the debts you owe and work with you to determine which accounts you want to settle. Once we have a clear picture of how you want to move forward, we will begin the process of contacting your creditors and making settlement offers that you can afford to pay. Whether you are attempting to negotiate a settlement of your credit card debt, second mortgage loan or tax debt, hiring a reputable law firm to settle your debt lets your creditors know that you mean business, and that, if they are unwilling to settle, a bankruptcy filing may follow.
The process of settling debts in Los Angeles can be complex and confusing, and even if you are certain that your debts qualify for settlement, it can be difficult to know who to trust and where to turn for help. Some debtors fall victim to scams by debt relief companies claiming they can settle their debts for less, only to be told to stop making their payments altogether to improve their chances of settling, which ends up tanking their credit even more. Negotiating reasonable debt settlement agreements with your creditors may be a good option for you, but it can be a stressful and complicated process, and it is always a good idea to have an honest and competent attorney in your corner who understands the complexities of debt settlement and can ensure that you obtain the best possible outcome based on your unique circumstances. At Resnik Hayes Moradi LLP, our attorneys are there for you every step of the way and we will make the debt settlement process as simple and smooth as possible.
How Our Los Angeles Debt Relief Attorneys Can Help
Whatever your financial situation, debt settlement is a better alternative to enduring creditor harassment or continuing to suffer under the burden of debilitating debt, and for many debtors, settlement offers many of the same debt-relief benefits as a bankruptcy. If you are considering settling your debts in Los Angeles or the surrounding area, you will want to speak with a debt relief attorney who can help you determine the best course of action based on your specific situation. At Resnik Hayes Moradi LLP, our team of accomplished attorneys is committed to helping clients in the Los Angeles, Orange County, Riverside, San Fernando Valley, and San Bernardino communities who are burdened by unpayable debt achieve financial freedom through the bankruptcy or debt settlement process. Consult our seasoned Los Angeles bankruptcy attorneys and Los Angeles debt relief attorneys at Resnik Hayes Moradi LLP today to find out how we can help.
“The bankruptcy attorneys at Resnik Hayes Moradi LLP provided us the peace of mind I so desperately needed. I was not sure what to do and I felt like I was at the end of my rope. They were there the entire step of the way and gave me the necessary information I needed to make the right choice for my family.” – Dave B.