Bankruptcy vs. Debt Negotiation — Myths and Truths

Ohio consumers who have accumulated levels of credit card debt with which they feel uncomfortable may be looking at the available debt negotiation options. While some possibilities can be useful, the myths that surround this subject makes it difficult to make informed decisions. After considering all the choices, it may be wise to compare those with the protection offered by the federal Bankruptcy Code.

It is a myth that all debt negotiation companies are dubious; many are reputable and committed to relieving consumers’ debt problems. Some belief that debt negotiation will remove all debt while taxes; however, alimony, child support and certain other debts cannot be resolved in this process. Furthermore, it is also a myth that debt negotiation will remove negative reports from a person’s credit record.

Some believe that they must pay debt negotiators upfront, but the Federal Trade Commission ruled in 2010 that companies must first provide the negotiation service before they can charge consumers. Consumers should not assume that debt negotiation is more expensive that other options. Comparisons may show other options such as credit counseling can be more costly in the end. The debt negotiation process will not prevent creditor actions, and additional interest, fees and even aggressive collection may continue.

While it is always a positive step for a consumer to take measures to reduce credit card debt, obtaining full knowledge of the pros and cons of all options will provide the opportunity to make informed choices. Decisions made at this time can be crucial. Having the support and guidance of an Ohio bankruptcy attorney may help the client to resolve debt issues and regain financial stability.

Source: wtvm.com, “6 debt negotiation myths”, Andrew Housser, Dec. 23, 2016