What Types of Debts Can be Settled in PA?
If you are thinking about filing for bankruptcy or are looking for another form of debt relief, it is important to know what types of debts can and cannot be settled.
Living with debt can be extremely burdensome, placing a weight on you every moment of the day and impairing your ability to think about nearly anything else. While debt may feel inescapable, there are solutions and options, and working with an attorney can help. One thing that is important to know before you take any type of debt relief action, though, is that not all debts can be discharged in a bankruptcy hearing or settled otherwise. Here is what you should know about what types of debts can be settled in PA.
Common Types of Debts
For the purpose of this article, we will discuss the common types of debts and whether or not these common types of debt can be settled. If you have a debt type that you do not see listed below, please reach out to our law firm directly for more information that is specific to your case.
Debts are divided into two different categories: secured and unsecured debts.
- Unsecured debts:
- Medical bills
- Student loans
- Credit card debt
- Personal loans, lines of credit, etc.
- Secured debts:
- Home mortgage
- Car loan
What is Debt Settlement?
Debt settlement refers to negotiating an agreement with a creditor in which you pay a settlement--a lump sum amount--in order to resolve your debt. Debt settlement is often facilitated by private debt settlement companies, and almost always is used to settle credit card debt. However, debt settlement can also be used to settle debt from medical bills, collections, business debts, and secured assets that no longer have any value or have been repossessed (such as a totaled car).
Note that in a bankruptcy hearing, a settlement will also be reached that discharges certain debts or/and establishes a repayment plan for others. While bankruptcy is different from debt settlement, it is important to know that certain types of debt, such as student loan debt, typically are eligible for neither discharge in a bankruptcy case nor debt settlement. In some cases, private student loans may be settled.
The Risks of Debt Settlement
Debt settlement can be a positive thing; you pay a lump sum of money and your debt is forgiven. There are also risks to debt settlement that you should be aware of, especially when working with a private company. These include negative impacts to your credit score because you will stop making payments directly to creditors before settling the debts, no guarantee that a creditor will agree to a settlement, and difficulty making payments into a savings account (often required by private debt settlement companies) in advance of the settlement process.
Call a Skilled Debt Settlement and Bankruptcy Attorney
Settling your debts may be a great option, but before you make any decisions you should familiarize yourself with the process, the risk, and the benefits, and learn more about what types of debts can be settled. At the office of Tadross Law, our experienced debt settlement and bankruptcy attorney in Pennsylvania can help. Call our law office today for a consultation to learn more about your options.