There are many reasons why residents in Massachusetts may need debt relief. Changing jobs, unemployment, divorce, death of a family member, chronic illnesses, and accidents are just some of the life events that can cause a financial crisis. Unfortunately, missing one or two payments on a loan or credit card can snowball into a mountain of debt you cannot pay.
The good news is there are several options for debt relief in Massachusetts that can help you get back on your feet. If you live in Massachusetts, our New Bedford debt relief lawyer helps you explore different debt relief options to determine which option is best to use in your situation.
What Debt Relief Options Are Available in Massachusetts?
When you choose a debt relief option in Massachusetts, it is essential to consider all factors. You need to consider your current financial situation and your long-term financial goals. You should also look carefully at the pros and cons of each debt relief option.
Forms of debt relief you might want to consider are:
Debt Consolidation
Debt consolidation is the process of combining debts. The goal is to lower your monthly debt obligation while seeking more favorable payment terms, such as a lower interest rate.
However, you are not eliminating any of your debt. Instead, you are combining your debts into a larger, single debt. Furthermore, the creditor may require collateral, which means risking foreclosure or repossession if you cannot repay the debt.
Debt Settlement
Debt settlement involves negotiating payoffs with each of your creditors. The payoff is a lump sum payment for an amount lower than the amount you owe. Debt settlement companies offer to do this for you, but they may charge a large fee for their services, and there is no guarantee of success.
There are a couple of downfalls to debt settlement. You may owe taxes on the portion of debts companies forgive, which could raise your tax liability. Also, you need a source of money for the lump sum payments. If you intend to use money from a home equity loan, you must pay the debt or lose your home. Dipping into your retirement or savings could jeopardize your future financial stability.
Credit Counseling
Non-profit credit counseling companies work with you to create a monthly budget to help you manage your money and pay off debts. Some companies offer classes and workshops to set up a debt management plan and negotiate payments with creditors. Be careful of companies that charge fees for these services.
Bankruptcy
Filing for bankruptcy can provide relief from debts. Chapter 7 bankruptcy or “straight bankruptcy” discharges unsecured debts. It is intended for individuals who cannot afford to pay any portion of their unsecured debts.
Chapter 13 bankruptcy is a debt repayment plan. You make payments to a Chapter 13 trustee. Chapter 13 can help you save your home and cars if you are behind on your loan payments. Depending on your financial situation, you may pay as little as a few cents on the dollar for unsecured debts.
Call Now to Learn More About Debt Relief Options in Massachusetts
Struggling with debts you cannot pay is overwhelming and stressful. However, you have options to help you get out of debt and move forward on a more solid financial footing. Contact Logan A. Weinkauf, P.C., to schedule a consultation with a New Bedford bankruptcy lawyer.