An attorney can be your best advocate as you consider some form of financial relief if you’ve fallen behind on your bills or can’t keep up with your mortgage payments.
In most cases, a lawyer will first review your financial information in order to establish just how dire the situation is before advising a path to set you back on the path to success and security. There are primarily three different options for resolving overwhelming debt problems, and each one has advantages and drawbacks.
Debt Negotiations And Settlements
In some cases, your financial situation may be quite serious, but can be worked out with a solid payment plan and appropriate negotiations with your creditors. It can help you avoid going to court and the stigma of having such a filing on your credit report for up to seven years, so it’s an option worth considering.
A CPA or lawyer experienced in these negotiations can significantly reduce the amount you have to pay back to credit card companies and even get the interest and penalties waived, saving you thousands of dollars.
He can also have your monthly payments reduced. To take this option, however, you’ll need to close all of the accounts and stop using credit until you’re debt-free.
Sometimes your money problems don’t stem from credit cards at all; instead, you may have gotten in over your head with back taxes. This is a particularly common problem for individuals who are self-employed and are burdened with unduly heavy tax responsibilities.
The IRS is interested in retrieving their money and can be very aggressive in pursuing you and slapping you with interest and penalties that are financially crippling. A good attorney can negotiate with the IRS, extending them an Offer In Compromise that outlines a more reasonable payment option and illustrates why you may be eligible for a significant, pennies-on-the-dollar settlement.
Penalty abatement from the IRS can also reduce what you owe by removing or reducing any interest and penalties, particularly if you are earnestly trying to pay off your back taxes.
Bankruptcy: Two Paths To Resolution
There are two commonly used forms of bankruptcy filed by individuals who are drowning in bills and outstanding loans. Chapters 7 and 13 are the most common.
In Chapter 7, an individual can have their assets sold to settle outstanding accounts. A trustee is appointed who will organize the assets and distribute them to creditors. With no limits, Chapter 7 can often get debts discharged with minimal fuss, but does leave a significant mark on your credit report.
Chapter 13 is a less severe way to resolve your financial problems.
Rather than liquidating your assets, it simply restructures your debt, allowing you and your lawyer to propose a reduced payment plan that can be achieved in three to five years. To qualify for Chapter 13, you must have reliable employment and there is an upper limit to the amount of debt allowed.
The best way to determine which option is right for you is to consult with a licensed Hawaii lawyer who is skilled in financial negotiations and familiar with all forms of debt relief. Some of these lawyers are also certified public accountants as well, enabling them to negotiate for you from an even stronger position.