With the current state of the economy many consumers are searching for the right way to {eliminate|extinguish|wipe out|eradicate} their debt and save some money. While debt settlement has become a popular method in negotiating with credit card companies, debt settlement companies are helping some while hurting others. Most people see bankruptcy as a last resort but there should be some careful consideration to filing chapter 7 rather than enrolling in a debt settlement program. You should know the fallout/fall off rate is greater than 70% (this means less than 30% of the people who enroll complete the program). When a person enters into a debt settlement program their creditors do not stop with the harassing phone calls, collection efforts and the threats of law suits. If America Express or Discover card decide to sue you, they will typically win. There will be a judgment, then a lien that will result in a wage garnishment or levy on your property (if there’s equity) or your bank account. Basically, they end up filing bankruptcy anyway. “What we end up seeing allot of is people trying to avoid bankruptcy and settle their debt another way, then they lose all that money they paid in when they could of filed a simple chapter 7 and have eliminated their debt completely” says, California bankruptcy attorney Jams D. Zhou , senior -partner at the Law offices of Zhou & Chini. Our main office is in Orange County, where many of these debt settlement companies are located. With so many Californians’ struggling financially it’s no wonder we see so much of this. Debt settlement is not a law like bankruptcy, and the credit card companies these days don’t appear to have the time or the patients to work with people in debt settlement. Credit card companies will aggressively pursue judgments and start wage garnishments or get liens to get their money. When you file bankruptcy your creditors are forced to halt their collection efforts with an “automatic stay”. If you file chapter 7 bankruptcy your debt get’s wiped out and you get a fresh start. For example: If you owed $40,000 in credit card debt and another $10,000 in medical bills, a debt settlement company might try and settle that for $25,000 with payments spread out over 48 months . In this situation the debt settlement fees would be approximately $7,500 and buried into the first 12 payments. If the same person filed chapter 7 bankruptcy the cost would be somewhere between $1,500 and $2500 depending on your bankruptcy lawyer, but you would completely eliminate your debt.

Chapter 7 will typically allow someone filing bankruptcy to keep everything except their unwanted debt , and get a fresh start. After the bankruptcy chapter 7 is discharged, credit scores will usually jump about 100 points and creditors will make new credit offers. With debt settlement programs lasting anywhere between 36 to 48 months it’s usually 4 to 5 years until someone can start re-establishing their credit. If chapter 7 bankruptcy can eliminate your debt and help you get back on your feet so quick why aren’t more people doing it? They are! Bankruptcy filings in some counties are up over 75%. While chapter 7 bankruptcy remains the most common type of bankruptcy filing, chapter 13 may be required based on the “means test”. Basically, if you make enough money to repay a portion of your debt or you are delinquent on your mortgage payments and want to keep your home filing chapter 13 bankruptcy may be required if you don’t qualify for chapter 7. To find out if you qualify for a chapter 7 bankruptcy contact a bankruptcy attorney who will run the means test for you at no charge. Please visit www.BankruptcyAttorneyinCalifornia.com or call (888) 901-3440 to see if you qualify.

The Bankruptcy Attorneys at the Law Offices of Zhou & Chini offer free bankruptcy information in an effort to help consumers who need debt relief or help avoiding foreclosure. If you have additional bankruptcy questions or need information about filing bankruptcy in California please contact our cooperate office at (888) 901.3440 or visit www.BankruptcyAttorneyinCalifornia.com. Our Bankruptcy Attorneys will be happy to offer you a FREE consultation over the phone or at one of our convenient locations. We are California bankruptcy attorneys with full knowledge of Federal and California State Bankruptcy Exemptions. Our Bankruptcy Attorneys can help protect your assets under Federal Bankruptcy Laws and can assist you with all aspects of your case. We are happy to answer questions about filing a chapter 7, chapter 13, chapter 12, chapter 20, or chapter 11 business bankruptcies. We can help with stopping /avoiding foreclosure or wage garnishments, and assist you in avoiding judgments, liens or levies. We can also help with mortgage cram downs, lien stripping, eliminating a 2nd mortgage and discharging debt. Please feel free to complete our free bankruptcy evaluation form or contact one of our office locations today. We are here to help and can quickly determine if you are a qualified candidate for bankruptcy.