Debt Consolidation v. Bankruptcy

Our office frequently fields questions regarding the advantage of a bankruptcy over debt consolidation – after all, no one really wants to be considering bankruptcy. However, bankruptcy will afford you more protection from your creditors than debt consolidation services provide.

1. Debt Consolidation: this service allows you to work with your creditors and attempt to settle your debt pennies on the dollar. The advantage to debt consolidation is primarily the feeling that you did not have to file a bankruptcy. In addition, debt consolidation does not take into account your assets which can change the type of bankruptcy you file.

What debt consolidation fails to tells you is that they need your creditors permission, a creditor can opt not to participate. Regardless, you will start paying into the company while they work with your creditors; during this process the creditors are still calling and suing you.

Further, creditors can send you a 1099c (cancellation of debt) – the amount of debt forgiven is taxable income at the end of the year.

2. Bankruptcy: this service allows you legally restructure your debt without requiring a creditor to say “yes” or “no”. There is no tax liability upon discharge of your case. More important, immediately upon filing your case, creditors are stopped from any collection actions and lawsuits/garnishments are instantly halted.

The difficult part of a bankruptcy is really the feeling you have that you are filing such a case. Let our attorneys walk you through this process and provide you the service you need in order to manage your debt.

Bankruptcy is a legal option for you to help with your debt. Our Westchester attorneys are sensitive to your financial needs and to helping your family get through this challenging time.

Please contact our Westchester Bankruptcy Attorneys today at (914) 864-2465 or (845) 628-4301 to discuss which option is right for you. Our Westchester bankruptcy lawyers will work with you to manage your debt and help you through your bankruptcy filing.