M.J. Shanahan & Assoc. Inc. - Living with debt is like living in Hell!
                   What Else Can We Do For You?


Debt Reduction or Settlement:

     There are times when filing for bankruptcy is not the best idea or may not achieve the result you want. We never push people into bankruptcy and if it is not right for you, we will say so.

     Some clients want to settle their debt instead, thinking this will help their credit as oppose to having a bankruptcy notation on their credit report for 10 years. Unfortunately they are wrong.

     What are the pros and cons of debt settlement?

     Pros:

    1.   There is no bankruptcy on your credit.

    2.   Any negative entry will be removed from your credit after 7 years in-stead of the 10 years the bankruptcy remains.

    3.   You can pick the creditors you want to pay in full and those that you want to bargain with.

     Cons:

     1.    You will get the best deal on settling your debt when your cards are close to 120 days late. This means you have to plan ahead and be prepared to settle the debt once an offer is made. Payment plans on debt settlements are usually not allowed.

      2.    You will be taxed on the amount of the claim the bank writes off. For example, if you owe $40,000 on a credit card and they agree to settle the matter for $5,000. You would now receive a 1099 for $35,000 and have to ad that to your gross income.  While we are not tax experts, we have seen the after effect of doing this. In some cases the combination of Federal, State, Social Security and Medicare taxes can run as high as 50%. So in this scenario the debtor would owe a little over $17,500 in taxes on a 35,000 debt. 

      3.    You will have to let payments fall behind at least 120 days to receive an offer to settle.   During this time you may be sued, you will received non-stop phone calls and letters and your claim may be transferred to another lender or collection company. Also your credit take a substantial hit because of the delay.

      4.     If a creditor sues you and obtains a judgment while you are trying to settle other debts, that judgment is good for at least 10 years, acts as a lien on your home, and collects interest at 10% a year. You would end up having to file anyway which means you have wasted money paying creditors who have not sued you.

Appeals:

     Our office handles appeals almost anywhere in the country. We have participated in over 1200 appeals nationwide, including Hawaii, the Federal Circuit, the Court of Trade, the Fourth Circuit, the Fifth Circuit, the Ninth Circuit and every appellate court in California.

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