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Options for debt relief

Washington, D.C., is an expensive place to live. In many cases, a serious health problem or job loss can result in substantial debt. Anyone who is serious about relieving their debt should carefully examine advertisements for debt relief services. These services are often provided by bankruptcy attorneys, but there happen to be several options in addition to filing for bankruptcy.

One option is to work directly with creditors to make payment arrangements. Many creditors are willing to work out a plan to keep their customer and get the outstanding balance paid. Another alternative to bankruptcy is to use a credit counselor to serve as an intermediary between the customer and the creditor. They are usually able to make reasonable arrangements with creditors if their clients are willing to deposit money with the counseling company every month.

In some cases, bankruptcy is the best option. Bankruptcy can eliminate a lot of debts and help a person who has unmanageable consumer debt to stop utility disconnections, foreclosure and wage garnishments. Depending on the debtor's ability to pay, a bankruptcy filing does not necessarily mean loss of their home. The federal and state bankruptcy laws allow anyone who files for debt relief to keep a predefined amount of exempted assets as well.

Prior to making a major decision about how to handle a debt problem, it is important to speak with an attorney who has experience helping clients file for bankruptcy. An attorney can provide advice and give guidance to help their client make the most appropriate and beneficial decisions regarding their financial situation. There are drawbacks to bankruptcy, including a long-term mark on a filer's credit report, but in many cases the benefits outweigh the disadvantages.

Source: FTC, "Debt Relief or Bankruptcy?", December 09, 2014

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