Whether or not an individual is good with money, he or she is likely to experience financial problems at some point life. However, there are options to get out of debt without doing unnecessary long-term damage to a credit score or history. The first option is to offer a lender a lump sum payment to settle the debt.
In some cases, the amount paid is much less than the amount an individual owes. Lenders may accept less than what is owed because it is cheaper and easier than going to court to obtain a judgment. In the event that a debtor has been taken to court, it may still be possible to settle. However, in such a scenario, the debtor may need to make a higher offer to have any chance of obtaining creditor approval to such a deal.
The last and most drastic action is to file for bankruptcy. Some debtors may be forced into filing bankruptcy depending on what type of debt they are unable to repay. For example, the IRS may be able to compel a bankruptcy if an individual cannot pay a tax assessment. Although a bankruptcy may be erased from a credit report after seven years, it may still impact an individual’s ability to get a job in the future.
Those who wish to obtain debt relief may turn to bankruptcy as a viable strategy to do so. An attorney may be able to explain the benefits of such a decision such as a stay of creditor contact and the potential for a timely discharge of some or all debts. This may help an individual get the fresh financial start that they need.