You’re experiencing some financial difficulties
and you’re considering some options. You’re considering bankruptcy or you may have heard
about debt settlement companies. There are positives and negatives to each. Bankruptcy
is quite simple. You file a bankruptcy. The debts that are dischargeable are discharged.
In a debt settlement program, you negotiate with your creditors for an installment payment
on a compromised amount. The negative to debt settlement is that when you file a bankruptcy
you’re credit is going to reestablish itself in two to three years. With debt settlement,
these debts are in part charged off and they stay on your credit report under the Fair
Credit Reporting Act for up to seven years from the last activity. There are also issues
in debt settlement with the voluntary forgiveness of debt and tax liability with the IRS. The
answer to the question is you need to speak to a competent professional who can guide
you to talk to you about the tax implications of debt settlement. Talk to a bankruptcy lawyer
to find out about what the long term effect is going to be on your credit and to help
you evaluate and make the best choice whether it be debt settlement or bankruptcy. You need
to seek advice. My name’s Andy Forman and good luck.