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Benefit from the Experience of Attorneys Bill and Valerie Sherman Former Assistant Attorney General, Assistant County Attorneys and Magistrate Judge

Should I do debt consolidation, debt negotiation or file bankruptcy?

Question: I owe thousands of dollars on credit cards and medical bills. I cannot afford to make payments anymore. My wife wants to get plastic surgery from a doctor in Atlanta and she says if I can’t pay for it she’ll do something illegal to get the money, like reort to prostitution.

I was considering debt consolidation or debt negotiation, but I am not sure if I should do that or file for bankruptcy. I wanted to ask a real Forsyth County bankruptcy lawyer what I should do and get some advice. So should I file bankruptcy or do debt consolidation or debt negotiation, which I saw on your website and which you did for my friends and that really helped them out? Or should I file bankruptcy?

R.B. in Cumming, GA

Answer: We obviously file bankruptcy for many clients, but we also offer “debt negotiation” as well. Debt negotiation can be a great option for people who either can’t file bankruptcy or who don’t want to file bankruptcy.

Please avoid the so-called “debt consolidators.” Debt consolidation companies are mostly scams that have been exposed on TV and by newspapers and magazines. They simply don’t work for most people. Although there can be lower interest rates and monthly payments offered, a debt consolidation company could end up costing you much more in the long-run. The way they work is simple: you send them a monthly payment, and they distribute it to your creditors. A lot of times these companies are not as knowledgeable about debt and the applicable laws in regard to financial situations; therefore, they can pressure you into a debt management plan that may not be completely right for you. Furthermore, there can be negative tax consequences because the IRS may consider any money saved by debt consolidation as extra income, which means you pay taxes on it. Credit card companies and other creditors can report settled debt to the IRS, so the IRS considers this as extra income. What you save on lower interest rates could end up being what you pay in taxes anyway. Overall, it’s much better to speak with a real debt lawyer before trying to tackle debt on your own.

As debt negotiation lawyers we try to get your debt substantially eliminated by negotiating what you must pay-back. We seek to have you only pay-back a certain percentage of what the creditor claims you owe.

Of course, as bankruptcy attorneys, the goal is to get your debts eliminated. And that’s either thru a chapter 7 or a chapter 13 bankruptcy filing.