1. Cost. A relatively simple Chapter 7 consumer filing could cost between $1,300 and $2,000. This includes the court filing fee, credit counseling, a credit report, and a debtor education course. Chapter 13 typically incurs attorney fees of around $3,000 and costs of around $450. In Chapter 13, however, attorney fees are typically folded into the monthly repayment plan and paid by unsecured creditors. In debt negotiation, the upfront payment is typically 10% of the debt being negotiated, in addition to any monthly fees, and is required before any work is performed.
2. Tax Consequences. In Chapter 7 or Chapter 13 bankruptcy, there are no tax consequences for debt discharge. Any debt reduction resulting from direct negotiations with a creditor will incur tax liability. If the quantity of forgiven debt exceeds $600, you will receive a Form 1099c. For instance, if you owe $10,000 to Visa and resolve for $3,000, you will receive a 1099 for $7,000 and must pay taxes on it.
Credit Reporting Effect. A Chapter 7 bankruptcy remains on a credit report for ten years. A Chapter 13 sentence is seven years. A written-off, negotiated, or uncollectible debt will remain on your credit report for seven years. However, if you are contemplating either option, the impact on your credit score may not matter. As a side note, I've observed that a bankruptcy typically improves my clients' credit scores and that the majority of them receive credit card and vehicle loan offers shortly after filing. Why? Because they have no debt and cannot declare bankruptcy again in the near future.
4. Regulations. Attorneys are authorized to practice law and are required to disclose all fees to the court. If fees are not earned or are excessive, the judge may order the attorney to refund the client. Debt negotiators do not require a license, special qualifications, or oversight.
Creditor Harassment is the fifth category. The automatic stay prohibits all creditor harassment once you file for bankruptcy protection. Any creditor seeking relief must do so before the bankruptcy court. They may not call, write, or contact your family, acquaintances, or place of employment. They cannot file or continue a lawsuit against you. They are not permitted to garnish your wages, bank account, or tax refunds. You may be entitled to monetary damages if the automatic stay is violated. When negotiating a debt, creditors are free to engage in the aforementioned activities.
6. effectivity. Except for domestic support obligations, a portion of income taxes, and student loans, a successful bankruptcy discharges all debt. A court will issue an order discharging the debt. In a Chapter 7 case, a sale could occur as early as four months after filing. In Chapter 13, after the payment plan, which can typically last between three and five years, the debtor is discharged. Typically, bankruptcy resolves all debt issues. A Chapter 13 bankruptcy can save your home from foreclosure, halt a car repossession, and eliminate a second or third mortgage. Each creditor will be negotiated with individually in a debt negotiation, with the emphasis on the word ""negotiate."" You do not have the legal authority to negotiate your debt. None. Doesn't exist. I have also heard the ads. I have read the law as well. You are not permitted to negotiate a debt. Insolvency is a constitutionally protected privilege. Creditors must participate. The debt is eliminated regardless of their preference.
7. Privateness. A bankruptcy filing is a matter of public record, and although it is improbable, anyone can learn about it. Except for notations on your credit report, a credit management is private.
8. Payment Plans. There is no payment plan in Chapter 7 bankruptcy. If eligible, you will receive a discharge with no additional payments. In Chapter 13, you determine your monthly living expenses and your disposable income is distributed to your creditors for the duration of the plan. In a debt management plan, you are told how much you owe and must then adjust your budget accordingly. These are contradictory concepts. The priority debt in a debt management plan is your monthly payment. In a Chapter 13 bankruptcy, unsecured creditors have the lowest payment priority.
Unfortunately, I don't know about all the successful debt management plans because I deal with individuals who are scammed, who are sued by creditors after an agreement is reached, or who cannot afford the monthly or lump-sum payments required by their creditors. I can assure you that bankruptcy works, and that is the one thing your creditors do not want you to know.""
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