If you are facing a large amount of debt and cannot seem to get caught up on your payments, you may have multiple alternatives to consider. Many individuals in this situation choose to pursue debt negotiation in order to reduce the amount of money that they owe to their creditors. It may allow them to avoid going into bankruptcy and facing foreclosure. This process can be daunting, however, and some creditors do not make it easy for debtors to find a plan that works for them. At the Bereliani Law Firm, bankruptcy lawyer Sanaz Sarah Bereliani has helped many residents of the Los Angeles region and other areas of Southern California explore their options.Learn How Debt Negotiation May Help You Regain Financial Control
There are many ways to go about debt negotiations, including lump sum settlements and debt consolidation. At the Bereliani Law Firm, we have obtained favorable results for many debtors through lump sum settlements. In this process, the creditors agree to different loan repayment terms. In most cases, the debtor will need to have a certain amount of funds available to settle, but we have helped many clients work through this requirement. After you and your creditor agree upon a lower debt amount, you will no longer owe the full amount to your creditor.
Creditors are open to entering into debt settlements because it allows them to recoup a guaranteed amount of the debt in a shorter period of time. If the debtor files for bankruptcy, the creditor may not receive any debt repayment, particularly if the debt is unsecured. In other words, a debt settlement turns a potentially uncollectable debt into a payment.
There are some situations in which a lump sum settlement may be the best option for a debtor. This typically occurs when the debtor has assets that cannot be protected through bankruptcy exemptions. In general, bankruptcy exemptions allow the debtor to protect a certain value of an asset, sometimes up to the full value. This prevents the bankruptcy trustee from selling this asset in order to satisfy your debts. Additionally, credit card debts are well suited for debt settlement because they are unsecured debts typically provided by private entities, which have more leeway to settle than government loan providers.
It should be noted that a debtor pursuing debt negotiation will be required to pay taxes on the amount of debt greater than $600 that is reduced from the debtor’s total outstanding obligation. The IRS views this forgiven debt as income. After the negotiation has been finalized, the debtor will receive a Form 1099 to report the amount of forgiven debt with his or her income tax filing. It is highly recommended that you seek out advice from a tax professional regarding how this can affect you specifically.Consult a Bankruptcy Lawyer in Los Angeles to Explore Your Options
If you or someone you know is struggling to keep up with their financial obligations and is facing substantial debt, the Bereliani Law Firm can help. Sanaz Sarah Bereliani is a knowledgeable attorney who can advise people in the Los Angeles area on filing for bankruptcy under Chapter 7 or Chapter 13. We can help you determine whether debt settlement is right for you. Our team of legal professionals can guide you through every step of the process and help you aggressively assert your rights. We offer a free consultation to evaluate your options and to help you understand how to make a positive step in your financial future. Call us now at (310) 882-5482 or contact us online to set up an appointment. Our clients come from throughout Southern California, including Culver City, Studio City, Encino, Santa Barbara, and Orange County.