Eliminate your Debt
When you are facing a financial crisis, you may feel as if your debt has become a consuming force in your life. You can, however, take steps to stabilize your situation. Learning how to eliminate debt can ultimately help you regain control of your life and regain your peace of mind.
Your first step should be to speak with one of the experienced New Mexico bankruptcy attorneys at Melwani Law to learn about your options, which may include debt settlement, debt consolidation, or bankruptcy. We will help you determine whether or not you qualify for a Chapter 7 bankruptcy. If not, you may qualify for a Chapter 13.
What is Debt Settlement?
Debt settlement may also be called credit settlement and arbitration. When you opt for the settlement of your debts, you or a company acting on your behalf will contact your creditors and request a negotiated schedule of payments that is more manageable for your budget.
Drawbacks to Debt Settlement
- Creditors must be willing to negotiate with you, and agree on a settled amount.
- Creditors may insist on receiving the settlement amount in one lump sum, which you may not have.
- Any debt that is forgiven by your creditors is considered taxable income by the IRS.
What is Debt Consolidation?
Consolidating your debts means to take out a single loan to pay off smaller debts. Homeowners may use a line of equity, for example, to try to pay off their debts using the equity in their homes.
Drawbacks to Debt Consolidation
- It may not help your credit score.
- All debts may not be included.
- You’re paying off one type of debt with another type of debt, which may lead to even more debt in the long run.
What is Bankruptcy?
Bankruptcy is a legitimate and constitutionally protected way for you to eliminate debt. Most people file either a Chapter 7 or a Chapter 13 bankruptcy.
Benefits of Bankruptcy
- Debts discharged through bankruptcy are not taxable.
- Debts are paid off or eliminated.
- Creditor harassment stops thanks to the automatic stay.
- You have an opportunity to rebuild your credit.
Filing for bankruptcy enables you to eliminate debt and in some cases, may even stop repossession or foreclosure. Because bankruptcy is a complex legal procedure, the New Mexico bankruptcy attorneys at Melwani Law can provide invaluable assistance along every step of the way. Contact us today for a free initial consultation to learn more.