Have Credit Card Debt? Debt Forgiveness vs. Bankruptcy

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Many individuals contact us because they are drowning in debt and don’t know which debt relief option is the best for them. We commonly get questions regarding having debt “written-off” by lenders and how it impacts them. Typically, a lender will write-off your debt (also referred to as charging-off your debt) if you have been delinquent on your payments for a long period of time. In fact, many companies have an internal accounting procedure that automatically performs this function because it permits the lender to deduct the loss as an expense. What does it mean to you? If your debt is written-off, it is important to understand that you are still liable to pay it.

For example, if your credit card company writes-off your debt, it can still continue its collection activity against you. The original lender can attempt to collect it from you or, more commonly, your delinquent account will be sold to a collection agency or a debt-buyer. When a debt-buyer purchases your debt, it is for a substantially lower amount than what is owed. Because your account was purchased at a discount, the collector may be willing to spend the money to file a collection lawsuit against you. If you fail to respond to the lawsuit (which the collector is hoping will occur), a default judgment will be entered against you. Once the collector has a judgment, it can file a garnishment of your bank account and/or wages, as well as take advantage of other collection tactics.

If you are considering filing a Chapter 7 or Chapter 13 bankruptcy, you should be sure to include your debts that have been written-off. As soon as your bankruptcy petition is filed, the automatic stay goes into effect and all collection activity against you must cease. This includes the harassing telephone calls, lawsuits, garnishments and other similar efforts.

If you are hesitant to file for bankruptcy and you have collection lawsuits pending against you, it is important to contact us for help. Do not ignore the lawsuits because they will not just disappear! We can file an answer on your behalf and prevent a default judgment from being granted by the court against you. You may have several defenses available to you as well. We can use this time to negotiate with your creditor and attempt to reach a settlement for a significantly lower amount that what you owe.

Don’t delay any longer. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.

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