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Debt settlement in New Jersey: Understanding your options

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All too often you hear or see advertisements for ways to get out of debt quick. Unfortunately, these get debt-free quick schemes are not all they are talked up to be. But, the good news is, there are options for those in debt or struggling to make payments.

Debt befalls those who fail to repay the debt they have incurred, whether it be on a credit card or something like a loan. When this happens, the creditor will start pursuing you for the money you owe — known as a collection. They may go through a collection agency or could even decide to file a suit against you for collection. If the court sides with the creditor then the big guns come into play, like foreclosure, bank levies, repossession, etc.

Debt settlement is one way to get your finances back on track in New Jersey. There are a few options you can choose from in order to settle your debt.

The first is a simple one and that is to take the time to reach out to your creditor. Let them know why you are about to miss a payment and what set you back so. It can be a family emergency, the loss of a job, or some other extenuating circumstance that kept you from being able to make your payment. Your creditor will not just clear you of your debt, but they may be willing to adjust your payments and work with after you provide a reasonable explanation and notice.

Creditors may work with you by accepting a lump sum settlement, which means you may pay $50,000 on an $85,000 debt. That leftover $35,000 would be forgiven but it will end up as income for you, meaning you will pay taxes on it.

If you do not have the cash on hand for a lump sum settlement, your creditor might be interested in lowering your interest rate. This would slow down your debt accumulation and give you time to catch up.

These viable options are definitely a good way of reaching a debt settlement but it is important to note that a debt settlement will negatively affect your credit score and show up on your credit report.

It is also important to know that in the state of New Jersey, only non-profit organizations are permitted to offer debt-adjustment services. This is protected under the Debt Adjustment and Credit Counseling Act. So do not be fooled by those smooth talkers on the television or radio, as they are only trying to scam you, not help you.

In summary, it is always best to speak with your creditor first and see if you can settle your debt with a payment plan or something of the like. If not, reach out to a non-profit organization to see what debt adjustment services they have.

Also keep in mind, that you can always file for bankruptcy. It is not the most desirable avenue but it is designed to organize your finances and provide you with a fresh start.

Regardless of what option you choose, it is always helpful to seek the counsel of an experienced bankruptcy lawyer. Esteemed attorney Joel R. Spivack is ready to help you with your debt settlement and/or bankruptcy. Contact the Law Offices of Joel R. Spivack via his online contact form to schedule a consultation today.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney/client relationship. If you are seeking legal advice, please contact our law firm directly.