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New Jersey Debt Negotiation Attorney
Financial vulnerability can have a significant impact on a person’s life. If you are experiencing financial problems, chances are you are also experiencing tension in other aspects of your life, maybe from a divorce, a sudden illness, or the lack of a stable source of income. It can be very easy to fall into the trap of honeypot tactics from organizations or businesses promising debt relief or the settlement of your debt. While there are legitimate ways with which you can settle or negotiate a loan or debt, most companies who claim to provide debt relief only seek to take advantage of financially vulnerable people.
Before you make any decisions, it is important to consult an experienced New Jersey debt negotiation attorney who can help you understand the pros and cons of engaging in debt settlement. At Straffi And Straffi Attorneys At Law, our team of experienced New Jersey debt negotiation attorneys may be able to introduce you to the legal options you can use to alleviate your financial concerns.
To learn more about how we can help you, contact us today at 732-341-3800.
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Debt negotiation, also referred to as debt settlement or debt relief, is the process of having a third party work as an intermediary between a debtor and their creditors with the goal of reducing debt. One of the main reasons why a creditor would agree to the negotiation is that debt negotiation assures that at least a portion of the debt would be paid instead of being paid nothing. Debt negotiation can help in restructuring a person’s debt and allow them to have a more manageable timeframe with which they can repay the creditor.
Depending on the agreed terms, a debtor might be able to settle a debt by paying a lump sum, negotiating a different payment plan with a longer payment schedule, or having the debt reduced.
Debt negotiation works best for unsecured debt, meaning debt that doesn’t have collateral. Common examples of unsecured debt include:
While student loans, business debt, and tax debt also count as unsecured debt, they are not eligible for debt negotiation. Debtors with secured debt like mortgages and who are at risk of foreclosure may not be able to avail of debt negotiation since creditors are less likely to agree with debt negotiation when they can just repossess the collateral.
If a debt negotiation company promises you that it can settle such debt, they are not likely to be a reputable organization. To be sure that your debt is eligible for debt negotiation, you can check with the Federal Trade Commission, Consumer Financial Protection Bureau, or the New Jersey Attorney General’s office. An experienced debt-relief attorney can also shed some light on the matter and help you protect your interests.
While there may be some limitations to obtaining debt relief, it can still be a viable option for some debtors. In some cases, debt settlement can forgive up to 50% of the balance owed. Debt settlement can also help debtors avoid filing for bankruptcy and, once the remaining debt is paid, collection agencies will stop any ongoing collection efforts.
However, it is important to remember that all of these benefits hinge on the assumption that the creditor would agree to the terms of the settlement. Our experienced New Jersey debt relief attorneys at Straffi And Straffi Attorneys At Law may be able to evaluate your financial situation and negotiate favorable terms that would best fit your needs.
Call us today at 732-341-3800 to schedule a complimentary consultation with one of our lawyers.
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Given the benefits of debt negotiation, it is only safe to conclude that the process also carries a significant amount of risks. As the creditor is not obligated to agree to an offer of partial repayment or debt reduction, a debtor may be subjected to terms that are more favorable to the creditor to sweeten the deal.
The new terms of the debt can leave a debtor in a more disadvantageous position than they would have been if they had paid the debt outright. Debt negotiation does not remove negative information already on the debtor’s credit report and may even cause further damage.
Debt negotiation companies also charge high fees. Comparing the fees that you would pay to the debt that would be relieved can be a good way to determine whether the negotiation would be worth it. Aside from your credit score taking a hit, you would still need to pay taxes on the savings you got from the settlement as it would be considered income by the IRS. If you had a debt of $20,000 and you settled $15,000, the remaining $5,000 would still be considered taxable income.
Should you choose to move forward with debt negotiation, you should also be aware of scammers who pose as legitimate debt negotiation companies.
The Federal Trade Commission advises about red flags you should avoid including:
Engaging with a debt negotiation company also does not guarantee that your creditor will not sue you for your debt. You may continue to accrue additional fees and interest while the negotiations are ongoing. Debt negotiation, including the time it takes to repay the debt, can take years and that is only if your creditor agrees to settle.
The risks can be mitigated by getting a reputable intermediary. An experienced New Jersey debt negotiation attorney may be able to help you in seeking a safer solution to settling your debt. Our skilled attorneys at Straffi And Straffi Attorneys At Law can thoroughly evaluate your financial situation and recommend possible legal solutions customized to your case.
Contact us today at 732-341-3800 or fill out our online form to schedule a free consultation with one of our experienced New Jersey debt negotiation attorneys.
Most people explore debt negotiation mainly as an alternative to filing for bankruptcy. Having a bankruptcy on your record can prevent you from getting credit in the future. However, by the time that you are considering settling your debt, your remaining options are likely to only be negotiation vs. filing bankruptcy.
Debt negotiation and filing bankruptcy only have two things in common:
While the list of their similarities is very short, debt negotiation and bankruptcy have a whole host of differences.
To start with, bankruptcy is a matter of public record. Whether you file a liquidation (Chapter 7) or a reorganization (Chapter 13) bankruptcy, your affairs will be heard in Bankruptcy Court where a judge would decide the outcome of your case. Debt negotiation is done privately, a negotiation between your representative – either an attorney or a debt negotiation company – and is considered a private transaction.
A debt settlement can take less time to finalize compared to bankruptcy if the creditor is willing to negotiate. A creditor would also be more likely to agree to negotiations as they are likely to receive at least something from the debt compared to if the debtor gets approved for liquidation bankruptcy. A bankruptcy would pause any lawsuits against the debtor by their creditors and stop any collection efforts while debt negotiation can only stop collection calls if the cease-and-desist is included in the agreement.
During debt negotiations, you may also be required to save money in an escrow account which will be used to pay off your negotiated debt. If you are working with an unscrupulous company, you may not be able to control the funds or get the money back. By filing for bankruptcy, you will be working directly with the Bankruptcy Court and their representative in repaying your debt as is in the case of a Chapter 13 bankruptcy.
Whether you apply for bankruptcy or engage in debt negotiations, getting the help of an experienced NJ debt settlement or bankruptcy attorney can help. An attorney can provide you with more information about each option and determine which would give you the most benefits depending on your situation.
Our skilled attorneys at Straffi And Straffi Attorneys At Law may be able to provide you with guidance on how to navigate the process of debt negotiation or filing for bankruptcy. Our practice is dedicated to helping clients make informed decisions about their finances to help them start anew.
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At Straffi And Straffi Attorneys At Law, we believe in collaborating with our clients and equipping them with the right tools that best fit their needs. We use our extensive experience to protect the rights of NJ residents and to provide quality legal services and representation. If you or a loved one is in a financially vulnerable situation and is considering debt negotiations or settlement, having an experienced NJ debt negotiation attorney by your side can minimize the risk of further financial damage.
Call us today at 732-341-3800 to schedule a free consultation with our top-rated NJ debt negotiation attorneys. You may also fill out our online form or visit our Toms River, NJ office.