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Debt Settlement vs. Bankruptcy

Los Angeles Debt Settlement Attorney

Debt Settlement vs. Bankruptcy

If you are struggling with debt, bankruptcy is not your only option. In some cases, it is possible to arrange a debt settlement with your creditors. However, we urge you to use caution before entering into such an arrangement. There may be tax consequences and other hidden risks that could leave you in worse financial shape than when you started.

The attorneys at RHM LAW LLP can help you explore all of your debt relief options. We offer you sound legal guidance, so you can make informed decisions about how you wish to resolve your debt problems.

Contact our bankruptcy attorneys in Los Angeles to take the first step in resolving your financial challenges.

The Dangers of Debt Settlement in California

There is a wide range of debt settlement companies out there, and they operate in different ways. Here is a typical scenario:

You enter into a debt settlement agreement and make monthly payments to the debt settlement company which they will hold in an escrow account. The claim is that, once you have built up a reasonable settlement amount in the account, the company will then reach out to your creditor to make a settlement offer.

The problem is that there is no guarantee your creditor will accept the offer. Meanwhile, you have been paying money to the debt settlement company while your debt problems continued to grow.

The difficulty is compounded if you have multiple accounts you are trying to settle. One creditor does not care what arrangement you have with another creditor. This is why debt consolidation services also fail in achieving true debt relief.

Tax Consequences for Debt Settlement in CA

If you do settle and your debt is reduced, the IRS will consider the reduction as income and tax you on it. This can leave you with a significant tax bill at the end of the year. The debt discharged in bankruptcy is not taxed.

For experienced legal guidance in your debt relief matter, consult with one of our Los Angeles bankruptcy attorneys at your earliest convenience by calling (213) 344-0043.

Client Reviews

What Clients Say About Working With Us
    "They were thorough, extremely knowledgeable, wonderful to deal with, thoughtful, and really helped guide me through what was one of the toughest times in my life."
    Matt and his team are the best!!  They were thorough, extremely knowledgeable, wonderful to deal with, thoughtful, and really helped guide me through what was one of the toughest times in my life. I never felt judged or looked down on. They were efficient and really were lifesavers during this tough time. I can not recommend them highly enough!!!!
    - Rusty H.
    "He negotiated on my behalf with a credit card company and was able to settle with them for much lower than I could have on my own."
    I worked with David Kritzer at this firm, and he was great. He negotiated on my behalf with a credit card company and was able to settle with them for much lower than I could have on my own thanks to his knowledge and expertise in the field. If you have a debtor on your back go to him to get it taken care of.
    - Kelly S.
    "Was very impressed with the comprehensive professionalism of the firm..."

    Was very impressed with the comprehensive professionalism of the firm, especially Matthew Resnik... I had suffered through the incompetence of two previous bk lawyers not to mention fees far greater than anticipated, without resolution. Having never gone through bk before, I did not realize how difficult it could be...then, my case was turned over to Mr. Resnik...almost immediately there was a marked positive difference. Where there was little to no communication, all of a sudden I am getting updates...regularly. Further, my case was finally discharged...yet, Mr. Resnik continues to communicate, offer assistance...and, has NEVER asked for additional fees, which I am sure he could have justified...much unlike the two previous attorneys with which I was dealing. I have no reservations, whatsoever, referring and recommending Matthew Resnik for any and all business or personal bk issues...or, other wise. I have no doubt that he will be transparent on helping you regardless of the problem. Good guy.. good firm... a wonderful experience!

    - G.L
    "I cannot thank them enough for helping save my home. I would recommend them for anyone that is thinking about filing for bankruptcy or foreclosure on their home."
    I needed a bankruptcy attorney in Sherman Oaks and found Matt Resnik on Google. He has one of the best-reviewed bankruptcy law firms on Yelp so I decided to check it out his law firm for myself. I quickly found out that they are foreclosure specialists and they could help me with my issue. They made the process very easy for me and laid out my options for me. I cannot thank them enough for helping save my home. I would recommend them for anyone that is thinking about filing for bankruptcy or foreclosure on their home. They are the best bankruptcy law firm in Sherman Oaks.
    - Joseph R.
    "Matt and his staff conducted themselves with professionalism throughout the whole ordeal."
    I worked with Matt and his team for about a year to get through the paperwork shuffle and my personal experience was nothing short of fantastic. Legal situations have a tendency to get hairy, but Matt and his staff conducted themselves with professionalism throughout the whole ordeal. To keep it short, let's just say he under-promised and over-delivered.  Rarely would I ever say this about an attorney, but overall he was just a great guy. I would not hesitate to have him on my side of the courtroom again. World market is right across the street from his office and I even decided to get his staff a thank you / holiday gift card.  World market has excellent craft beer BTW, try the Einstock White Ale. They also validate parking. That just shows this isn't a fake review.
    - Dean C.
    "I filed bankruptcy with this firm 3 years ago and found that they are professional, friendly, and compassionate."
    I filed bankruptcy with this firm 3 years ago and found that they are professional, friendly, and compassionate. I also met with their loan modification department. Unfortunately, they were unable to help because of the type of loan that I have. I really appreciated that they did not lie, waste my time, or take my money in an attempt to modify a loan that was not doable. I've since used their firm for a couple of minor issues and found all of the attorneys to be knowledgeable and considerate. Attorneys Simon and Resnik are amazing!
    - Shannon J.
    "We are very happy that you were able to accomplish the modification of our loan in such a short period of time. Thank you again for your professional service."

    Dear Mr. Resnik: We wanted to thank you for your professional handling of our loan modification with GMAC mortgage. We are very happy that you were able to accomplish the modification of our loan in such a short period of time. Thank you again for your professional service.

    - W and B Mejia
    "As the dank blanket of economic uncertainty continues to depress the hopes of many of us, I keep your business cards and number available for others."
    This is to thank you for the exceptional work of you and your fine staff. In managing my bankruptcy and loan modification, a nearly five-year effort, your performance was stellar. I never felt alone or adrift, key concerns in those circumstances. The outcome was outstanding. As the dank blanket of economic uncertainty continues to depress the hopes of many of us, I keep your business cards and number available for others. Without hyperbole, I can attest that you are present a beacon. Thank you so much.
    - K.C.
    "He not only saved my house but also got rid of all my debt. They are not your typical attorneys and their creativity really allowed me to do things that other attorneys never mentioned in previous consults."
    Fantastic office! I want to thank Matt for taking his time with me and sincere in his assistance. He spent over an hour with me for free during our initial consult. I left knowing exactly what's needed. He not only saved my house but also got rid of all my debt. They are not your typical attorneys and their creativity really allowed me to do things that other attorneys never mentioned in previous consults. Affordable and Outstanding firm and thank you for all you have done! My family thanks you!
    - David K.

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