Debt Settlement

One of the biggest challenges individual and corporate debtors, alike, face in these tough economic times, is the ability to service their debt as it becomes due. As a result, many debtors are forced to default on their loan obligations, which often times triggers default interest rates that only exasperates the rate at which debt accumulates. While Bankruptcy may often be used as the ultimate debt relief tool, it has significant long-term effects on the debtors’ future ability to borrow, and should therefore be used as a debt solution of last resort.

Debtors seeking financial help may be surprised by their creditors’ willingness to cooperate in finding solutions that would help the debtor avoid bankruptcy proceedings, where they are unlikely to recover anything from the debtor. As such, these creditors – typically of credit card debt and other consumer debt – often agree on some debt reduction amount or settlement of debt for a reduced amount, and write off the remainder as bad debt, thereby removing such bad credit loans off their balance sheets. Such settlement agreements essentially amount to a release from debt to the debtor, and allow the debtor to better manage their debt subsequently. Such debt settlement arrangements are different from debt consolidation efforts, as they don’t typically involve re-financing of existing debt, but rather the settlement of existing debt at a reduced amount, with a release from future liability to the debtor on the remaining balance.

The business attorneys at the Scottsdale office of Bar Urness, PLC, assist our clients in evaluating and pursuing debt settlement solutions as a means to avoid bankruptcy, whenever possible. If creditors are harassing you, or have otherwise initiated legal proceedings against you, please contact us for a consultation on the various options available to you.