How Is Debt Settlement Defined In New York?

Debt settlement is defined in New York as settling the debt for less than the amount you owe. There are certain defenses, and maybe certain objections to the amount that’s claimed in these cases. It could be a 100% objection, or it could be an objection to a certain percentage of what is trying to be collected, but we use those defenses to try to settle the debt for less than the amount that is claimed.

Is The Process Different If An Attorney Is Involved In Debt Settlement?

With the right representation, the attorney will put up certain barriers between you and your creditors, so your creditors can no longer harass you with phone calls or letters at home or at work or email. Once I get involved and put the creditors on notice of my representation, the creditors are no longer allowed to contact the client directly to discuss the debt. All communication must go through my office.

What Is Debt Consolidation? Is It The Same Thing?

Debt consolidation is taking a number of different debts, combining it into a single loan, and making one single payment. Then that payment is distributed amongst all the creditors. It’s similar to debt settlement, but it creates a regular payment plan where the payments usually go directly to the creditors, instead of settling the debt all at one time.

Why Should Someone Consider Debt Settlement?

There are two ways in which my office handles clients that have excessive debt, and those would be either a debt settlement program or bankruptcy. If somebody doesn’t qualify for bankruptcy, for one reason or another—whether they make too much money, have too many assets, or they just have a personal aversion to bankruptcy—I offer debt settlement as an alternative. This resolves the debt, and either pays the creditors a portion or the full amount of the debt over time.

How Does The Process Of Debt Settlement Work In New York?

The first thing that I do when I have a new debt settlement client is I contact the creditors and put them on notice of my representation. I prevent the creditors from contacting the client directly. From that point forward, all communication should come through my office, and I will deal with both the client and the creditor. I create a barrier between the creditors and the clients. The next thing that I do is I evaluate my client’s financial situation, and come up with an affordable payment plan for each client. They will start making payments, which are deposited into an escrow account. When that escrow account is sufficient to start negotiating with the creditors, I’ll take that money, negotiate with the creditors, and settle the debts, usually one by one.

What Happens If All My Debt Cannot Be Settled? What Can I Do With The Remaining Debt?

If all of the debt is not paid in full in a settlement program, the creditors can further pursue that debt. There might even be a lawsuit. However, there might be a defense to that lawsuit. Sometimes that defense will lead to a settlement. If it’s not paid, sometimes creditors will just abandon the debt, which means there won’t be any more collection activity, or they’ll issue what’s called a 1099. This is a tax form that basically says that the client has basically been exonerated from the debt, but there might be a tax consequence based on the 1099 issuance.

For more information on Debt Settlement Program In New York, an initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (914) 686-3171 today.