Law Office of Allan E. Dunaway, PLC

Debt management strategies

Some Kentucky residents may be interested in the different ways that a consumer might try to manage large debts. Debt settlement and bankruptcy may have different effects on a debtor's credit history, and the strategies may be more or less effective depending on the circumstances of each case. Bankruptcy generally causes the most damage to the debtor's credit report, but the debt settlement process can also be damaging.

One article suggests that consumers should consult with a not-for-profit credit counseling agency before choosing debt settlement plans or bankruptcy protection. Two organizations that support credit counseling agencies are the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. These nonprofits may be able to help consumers pay down debt and restore credit through affordable payment plans.

Another debt management strategy is known as debt settlement. This option requires a consumer to make a large lump-sum payment to the creditor, but might force the debtor to forgo monthly payments while saving their income for a long period of time, which may negatively affect that person's credit. While debt settlement may provide relief, this strategy might leave a person open to litigation from creditors.

Filing for federal bankruptcy protections is a third strategy for those who are dealing with large unmanageable amounts of debt. For example, by filing for Chapter 7 bankruptcy, a person may be able to discharge liabilities, but the action requires liquidation of certain assets and is subject to certain income requirements. If an individual is interested in filing for bankruptcy, they might work with a lawyer who is familiar with the different requirements and obligations that are accompany debt relief.

Source: Fox Business , "Debt Settlement vs. Bankruptcy: Which is Worse for Credit Score?", Jane McNamara, April 23, 2014

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For sound bankruptcy advice you can count on, from a skilled lawyer who truly cares about your future, contact the Louisville Law Office of Allan E. Dunaway, PLC. We have two convenient locations: Louisville, Kentucky, and Jeffersonville, Indiana. Our main office in Louisville is located off the beaten path so you won't have to deal with downtown traffic and can pull right up to our door and walk right in.

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If for some reason personal bankruptcy is not for you, if you do not qualify for the Chapter 7 approach via the "means test" and Chapter 13 reorganization is not the answer, Allan E. Dunaway works hard to inform you of other appropriate means of debt settlement that suits your unique needs.

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