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Debt has you feeling down? You are not alone. The average American household owes $155,622 in debt, including car loans, mortgages, and consumer debt. The thought of paying a substantial amount of debt can feel insurmountable at times. Thankfully, we have legal paths, debt resolution programs, and plans in place that can assist you on your journey towards financial freedom. Our Los Angeles bankruptcy team explains the difference between debt relief services and bankruptcy.

Debt Relief Services

Debt relief services is an umbrella term that includes various programs and plans that assist in getting you out of debt without filing bankruptcy. Let's explore two of the most common debt relief options.

Debt Settlement

If you cannot pay back the total amount of the debt, you may consider debt settlement. With debt settlement, you agree to pay a portion of the debt owed in the form of a lump sum.

Though there are companies that help with debt settlement, it is best done with the assistance of an attorney who will be knowledgeable of debt relief and the laws associated with it.

Debt Consolidation programs

Debt consolidation entails taking out one loan to pay off many others. This one loan will pay off other creditors, thus eliminating paying interest for various debts. Note that not all credit counseling agencies are honest. There are many scams, and it is recommended you do your research before you hire one.

There are some notable downsides to choosing debt relief services over bankruptcy. One of these downsides is debt collector harassment will not stop. Filing bankruptcy legally stops creditors from harassing you, while they can continue to contact you with debt relief.


Simply put, bankruptcy is the legal process where a judge evaluates an individual's assets who believe they cannot pay their debts. The judge will provide the individual methods to resolve their debts. There are two common forms of bankruptcy, and it is crucial to understand their differences.

Chapter 7 Bankruptcy

With Chapter 7 bankruptcy, a judge appoints a trustee to be in charge of liquidating all of your non-exempt assets. Once the assets are liquidated, the money is used to pay your creditors. Once the funds from the liquidation have been distributed, the remainder of the debt will be discharged completely.

Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, also called wage earner's plan, the court will assign you a payment plan of 3 to 5 years to repay your creditors. Any debt remaining will be discharged at the end of the repayment period. Individuals can keep their homes from foreclosing and remedy delinquent mortgage payments over time by filing under this chapter.

Which option is right for me?

Choosing whether to pursue debt relief or bankruptcy boils down to personal choice. Remember that debt relief services and bankruptcy lead to a low credit score. While having some debt is helpful to build your credit, a history of not being able to pay it will lower your credit score over time. Bankruptcy, though drastic, may be the quickest method to bring down your debt.

It is Instrumental to have an attorney guide you through the particularities of your financial situation.

Contact Our Los Angeles Bankruptcy Team Today

Here at RHM LAW LLP we understand the sense of urgency you may be feeling to get rid of your debts. With over 20 years of experience, We are well-equipped to help you find the financial freedom you deserve.

Contact us today through our website or give us a call at (213) 344-0043 for a complimentary consultation to find out how we can help you!