Your credit score may be negatively affected.

Settling a debt for less than the full balance is typically reported to credit bureaus, and it will show negatively on your credit report, in all likelihood.

High and Hidden Fees.

Debt Relief companies often charge up to 25% of the total debt for their fees. Sometimes, up to 70% of early monthly payments go directly toward Debt Relief company fees rather than being paid to your creditors.

Forgiven debt may be taxed.

When a creditor forgives part of a debt, the forgiven amount can be treated as taxable income, and you may receive a 1099-C, upon which income taxes may need to be paid. This catches many people by surprise, and it's something to plan for, not discover later.

Lawsuits and Garnishments may continue.

Creditors are under no legal obligation to settle and they may continue to take actions against you, despite the fact that a Debt Relief company is working on settling your debts.

The Brown Law Firm — Jerome A. Brown, Board Certified Attorney in Consumer Bankruptcy Law and Business Bankruptcy Law by the Texas Board of Legal Specialization — 40+ Years Legal Experience

Alternative to Bankruptcy

Debt Settlement

Debt settlement means negotiating directly with your creditors to accept less than the full balance as payment in full, with no bankruptcy filing. It can be a real option, but it's also an area full of “so-called debt relief companies” that overpromise and underdeliver. Attorney-led settlement, with the tradeoffs explained upfront, is a different thing entirely.

Bankruptcy isn't the right answer for everyone. In some situations, having us negotiate with creditors to settle a debt on your behalf is a better fit. The honest version starts with a straight answer from Jerome about whether debt settlement makes sense for you.

This page explains how debt settlement works, when it's a good fit, the tradeoffs to know going in, and why having an attorney with Jerome's experience and credentials, and his knowledgeable team handling it matters.

First, the tradeoffs to know and what Debt Relief Companies won’t tell you in all likelihood

Jerome has handled countless cases where Clients first sought help from a Debt Relief company, had an unsatisfactory experience with them and were left owing more debt than when they started the program with the Debt Relief company. Debt settlement can have real downsides worth understanding before you start. We encourage you to conduct online research regarding complaints against Debt Relief companies to verify that what we are telling you below is true. Below is what many Debt Relief companies won’t disclose to you.

Your credit score may be negatively affected. Settling a debt for less than the full balance is typically reported to credit bureaus, and it will show negatively on your credit report, in all likelihood.
High and Hidden Fees. Debt Relief companies often charge up to 25% of the total debt for their fees. Sometimes, up to 70% of early monthly payments go directly toward Debt Relief company fees rather than being paid to your creditors.
Forgiven debt may be taxed. When a creditor forgives part of a debt, the forgiven amount can be treated as taxable income, and you may receive a 1099-C, upon which income taxes may need to be paid. This catches many people by surprise, and it's something to plan for, not discover later.
Lawsuits and Garnishments may continue. Creditors are under no legal obligation to settle and they may continue to take actions against you, despite the fact that a Debt Relief company is working on settling your debts.

When you hire The Brown Law Firm to represent you on debt settlement matters, Jerome will discuss your options with you, along with the advantages and pitfalls of debt settlement. He will walk you through these openly so you can make an informed decision, not a hopeful one. Oftentimes, The Brown Law Firm can negate or minimize the negative effects that come with debt settlement.

How Debt Settlement works

In a debt settlement, we negotiate on your behalf with your creditors to accept a reduced amount as full payment on what you owe. If a creditor agrees, you pay the amount your debt is settled for and the remaining balance is forgiven by the creditor. It happens outside of court, so there is no bankruptcy filing and no trustee involved.

Settlement depends heavily on the creditor's willingness to negotiate. The vast majority of creditors will; some won't. There are no guaranteed outcomes, and any debt relief company that tells you otherwise is not being truthful with you. However, historically, in the great majority of cases, Jerome and his team have been able to settle debts for Clients at significant discounts.

Who it's right for, and who it isn't

Debt settlement works better in some situations than others, and it isn't the right tool for everyone. The right answer depends on the kind of debt you have, your financial position, and whether your creditors are open to negotiating. In some cases, bankruptcy or another approach offers protections that settlement simply can't.

Rather than guess at which bucket you fall into, the best move is to look at your actual situation. Jerome will give you a straight read on whether settlement is a viable option for you or whether something else fits better.

Why attorney-led settlement matters

Many debt settlement companies advertise heavily, charge steep fees, and deliver far less than promised. Some leave people worse off than when they started. Working with a board-certified bankruptcy attorney with over 40 years of experience is a different thing entirely. Jerome can assess whether settlement is genuinely your best option, weigh it honestly against bankruptcy and other paths, and handle negotiations with your interests at the forefront, and the full picture of your finances, in view.

Jerome A. Brown is Board Certified in both Consumer Bankruptcy Law and Business Bankruptcy Law by the Texas Board of Legal Specialization.

Not sure if settlement is right for you?

That's exactly the kind of question a free consultation answers. We'll give you a straight read on your options, settlement, bankruptcy, or something else, before you commit to anything.

Free Initial Consultation

Serving Victoria and the Austin metro.

Debt settlement outcomes vary based on individual circumstances. The Brown Law Firm does not guarantee specific settlement amounts or results.