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The Advantages of Chapter 7 Bankruptcy vs. Debt Settlement


Chapter 7 Bankruptcy vs. Debt Settlement

What Is The Best Way To Get Rid Of A $50,000 Credit Card Debt?

If you have a large credit card balance you can't pay, chapter 7 bankruptcy offers many advantages that debt settlement does not.

Chapter 7 discharge is less expensive, much faster, offers a more reliable outcome and allows rebuilding of credit sooner than debt settlement. 

Below is a comparison of the results one can expect from treating a $50,000 credit card debt by filing Chapter 7 Bankruptcy vs. enrolling in a debt settlement program. 
 

  • Chapter 7: Costs much less than debt settlement
  • Chapter 7: Much faster than debt settlement
  • Chapter 7: Prevents any/all lawsuits against you
  • Debt Settlement: Does not prevent lawsuits, it makes them more likely
  • Chapter 7: One low fee, $0 to credit card debt
  • Debt Settlement: You pay 50% of credit card debt and has higher fees and taxes
  • Chapter 7: You pay no income tax on discharged debts
  • Debt Settlement: You pay income tax on all settled debts
  • Chapter 7: You can sue any creditor that harasses you
  • Debt Settlement: You have no legal defense against collections or lawsuits
  • Chapter 7: You are represented by an attorney bound to assert your legal rights under the bankruptcy code
  • Debt Settlement: You are not legally represented - your agents are unregulated employees of sales organizations
  • Chapter 7: Reliability bankruptcy court stores/records government records to immediately stop any dispute arising later
  • Debt Settlement: Unreliable - debt settlement companies come and go and are not regulated entities. Records are frequently lost, misplaced, or unavailable. High turnover means they don't know (or care) who you are after you pay
     
Advantages of Chapter 7 Bankruptcy Disadvantages of Debt Settlement
Licensed Attorney Representation: You are legally represented by an attorney, protected from collection and lawsuits. Creditors cannot collect after filing. No Attorney Representation: Debt settlement does not provide legal representation, leaving you vulnerable to lawsuits.
Cost: Lower. Chapter 7 costs up to 85% less than debt settlement and resolves debts in 90 days. Cost: Higher. Debt settlement requires advance fees and significant payments, with added income tax on forgiven debt.
Example: Cost To Discharge $50,000 Credit Card Debt Through Chapter 7 Bankruptcy
Attorney Fee: $1,500 + Filing Fee: $338 ($0 Tax)

Total Cost: $1,838

You Cannot Be Sued

 Example: Cost To Discharge $50,000 Credit Card Debt Through Debt Settlement
Advance Fees: $3,750, Settlement Fund: $25,000, Tax: $625

Total Cost: $29,375

You Can and Will Be Sued
Chapter 7 Legal Protections: Complete protection from creditors under the bankruptcy code. Creditors cannot sue, bill, or call you. Debt Settlement Legal Protections: None. You may still be sued while making payments, leading to financial losses.
Takes Less Time: Bankruptcy discharge occurs in 90 days, allowing quick credit rebuilding. Takes Longer: Debt settlement can take 2-5 years before credit can be rebuilt.
No Tax Effect: Discharged debts are non-taxable. Income Tax Effect: Settled debt is considered taxable income.

What Sets Us Apart

  • Representation From a Law Firm With One of the Highest Client Satisfaction Ratings in the State.

    Our dedication to client success has earned us top satisfaction ratings, ensuring you receive trusted, results-driven legal support.

  • Personalized Attention From Start to Finish.

    We take a hands-on approach to your case, providing direct support and tailored legal guidance every step of the way.

  • Affordable Chapter 7 Bankruptcy Payment Options.

    We offer flexible payment plans to make Chapter 7 bankruptcy more accessible, helping you move forward without added financial stress.

  • Evening and Weekend Appointment Availability.

    With evening and weekend appointments, we make it easy to get the legal help you need, on your schedule.

    “Grateful”
    After years of struggling w/deriorating health due to a series of heart attacks,I struggled with trying to maintain my chiropractic practice and remain current with my current obligations. The struggle became unbearable with the COVID 19 shutdown and I really don't know what I would have done without the very capable counsel of Atty.Alex Hilton. I was interviewed at length,explained what was expected of me and told how to collect the necessary documents. I will be forever grateful for the compassion and expertise demonstrated by this law firm .
    Thomas Joyce
    “Magnificent knowledge and customer service!”
    A wonderful, professional attorney who cares! Recently we were at our darkest moment, financially speaking. However, Mr. Hilton clearly explained our legal rights and obligations and demystified the bankruptcy process for us. No surprises at all -- I could not recommend him more highly!
    Aaron
    “Best bankruptcy attorney ever!!”
    Calling Alex was the best decision we have made!!! We were in a bad situation and had previously recieved some bad advice that made our financial situation even worse. Alex agreed to meet us the same day we called him and he even stayed late to do so! After looking over our mess, he gave us his advice and he answered EVERY SINGLE QUESTION we had! The rest is history! He did everything he said he would!! If you need help and are looking for a bankruptcy attorney, then look no further!! Call Alex today! You will not regret it!
    Kenna
    “Our case complicated and our situation was dire... He took our case, got it sorted out and got our discharge.”
    Our case was complicated and our situation was dire. I was a nervous wreck. Mr. Hilton assured me that once I stepped foot in his office that our problems because his problems and to no longer worry about it. Of course we are only human so that wasn’t possible however, true to his word he took our case, which wasn’t just a straight forward easy chapter 7, and got it sorted out and got our discharge. I would HIGHLY recommend him.
    Steven
    “"If you are looking for someone to help you get back on track financially [...] Alex Hilton is your man."”
    My mother and I have used Mr. Hilton's services on two separate occasions, and we cannot say enough good things about him -- as an attorney, and as a person. He is approachable, polite, transparent about his business practices, sympathetic to each client's particular financial situation and, of course, very knowledgeable about the laws pertaining Chapter 7 bankruptcies. Whenever either of us had a question about the process, he answered our queries thoroughly, making sure we understood everything we needed to before moving forward. Subsequently, what could have been nightmarish ordeals for us both instead were handled with relative ease and care. If you are looking for someone to help you get back on track financially without judgment or the fear of being overwhelmed by what can be an arduous and costly process, then Alex Hilton is your man.
    Khan
    “"Mr. Hilton is a gem and a pleasure to work with!"”
    My wife was so nervous to file bankruptcy and Mr. Hilton talked with her and gave her the history of bankruptcy and the reasoning that is was the right thing to do in our case which set her mind at ease. Mr. Hilton is always there if we have questions and always quick with return emails and phone calls. Even months after everything is finished he is still there for us. Cannot recommend this man highly enough to do him the proper justice.
    L & M Johnson
    “I was terrified and overwhelmed and Mr. Hilton helped make an impossible situation manageable and he did so with patience and extreme kindness.”
    It's been almost a year since Mr. Hilton saved us from a desperate situation. He helped us overcome an incredible burden and helped relieve a tremendous amount of financial stress we were dealing with on a daily basis. Personally, I was terrified and overwhelmed and he helped make an impossible situation manageable and he did so with patience and extreme kindness. He answered all of our questions and was always prompt with returning phone calls. The entire process was seamless for us and we couldn't have asked for a better attorney to represent us during the bankruptcy process.
    M&S B.
    “He worked hard on our mess of a Chapter 13 case. I will recommend him to anyone I know that is in need of a Bankruptcy Attorney.”
    After having a flake for our 1st attorney, Alex Hilton turned our case around and got us amazing results. He worked hard on our mess of a Chapter 13 case. I will recommend him to anyone I know that is in need of a Bankruptcy Attorney. He is kind , compassionate and doesn't mess around
    Former Client
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