We’ve talked at length in past blogs about the dangers of cutting corners when it comes to debt. However, there are several legitimate avenues available to find debt relief. The most common solutions are debt consolidation, debt settlement, and bankruptcy. Nonetheless, before taking action to resolve debt, it’s important to understand each option.

Debt Consolidation

As the name suggests, this tactic consolidates, or combines, all of your smaller debts into one much larger debt. Having only one bill to pay rather than several can feel less overwhelming, even if you technically still owe the same amount overall. Consolidated debts also tend to have lower interest rates and monthly payments, making them more appealing.

But don’t let that small interest rate and single bill fool you into thinking you have less to pay. Your debts are still there, and if your spending habits haven’t changed, the debts will remain.  Often times, debt consolidation plans become overwhelming and are ultimately unsuccessful.

Debt Settlement

Debt settlement is often a last resort before bankruptcy. With debt consolidation, you are still paying off your debt, just in one place. Settlement, on the other hand, comes into play when you are no longer able to pay your debts and attempt to negotiate with creditors to settle the amount owed for less. If the creditor agrees, you can pay it off at the lower amount and/or possibly in a payment plan arrangement. However, you may still responsible for late fees, collection costs and interest, which may continue to accrue while you negotiate the settlement.

Debt settlement doesn’t protect your credit score or record, and creditors must agree to accept your proposal to pay less. There are also tax consequences that arise when you compromise a debt which triggers a different type of liability.  Because of these factors, it’s important to have an attorney advocating for you during debt settlement negotiations. We’ll get you the best deal and protect you from being taken advantage of by creditors.


Although a difficult decision, bankruptcy provides a useful and sometimes necessary decision — to wipe the slate clean and provide you another chance for a better future. There are different chapters available for the typical consumer debtor.  You may be able to file a Chapter 7 bankruptcy to for an immediate relief of your debts or you could also file a Chapter 13 bankruptcy, allowing you to pay off certain debts over time.  An experienced bankruptcy practitioner can help you determine which chapter is the best option based on your particular needs.

Declaring bankruptcy will temporarily impact your credit score and report, but you won’t be alone through the process. With a bankruptcy attorney by your side, you’ll be protected from creditors and will be able to achieve the financial freedom you seek.

If you’re overwhelmed by debt or have questions about your relief options, contact Perez Law Group, PLLC today at (602) 730-7100 or fill out the form below to setup a consultation.

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