If mounting debt is keeping you up at night, you’re not alone. Americans’ total household debt hit a record $18.04 trillion in 2024. When debt feels unmanageable, it’s essential to understand your options and choose the right path to financial relief. Two of the most common solutions are debt settlement and bankruptcy, but which one is best for your situation?

At the Law Office of Joel Gonzalez, we understand how overwhelming debt can be. As a trusted bankruptcy attorney in Corpus Christi, we guide individuals toward financial relief, whether through bankruptcy or by evaluating alternatives like debt settlement. Let’s break down these options to help you make an informed decision.

What Is Debt Settlement?

Debt settlement involves negotiating with creditors to reduce the total amount you owe. Rather than paying off your entire debt, you reach an agreement to pay a lump sum that’s typically less than your original balance. While this might sound appealing, it comes with significant risks.

Pros of Debt Settlement:

• Potentially reduces the total amount of debt owed.
• Provides an alternative to filing for bankruptcyrelief in Texas.
• May allow you to avoid the long-term effects of bankruptcy on your credit report.

Cons of Debt Settlement:

• Creditors aren’t obligated to accept your offer, and some may refuse to negotiate.
• Debt settlement can severely damage your credit score, especially if you stop making payments during negotiations.
• Fees and taxes may apply to forgiven debt, increasing your financial burden.
• Debt settlementdoesn’t protect you from creditor lawsuits.

What Is Bankruptcy?

Bankruptcy is a legal process that allows individuals to eliminate or restructure their debts under federal protection. There are different types of bankruptcy, but most individuals file under Chapter 7 or Chapter 13, each offering distinct benefits.

Pros of Bankruptcy:

• Offers immediate protection from creditors through an automatic stay.
• Can eliminate unsecured debts such as credit card balances and medical bills.
• Provides a clear legal path toward financial recovery.

Cons of Bankruptcy:

• May remain on your credit report for up to 10 years, affecting your ability to secure loans or lines of credit.
• Can result in the loss of non-exempt assets depending on the type of bankruptcy filed.
• Not all debts are dischargeable, including certain tax obligations and student loans.

Which Option Is Right for You?

Choosing between debt settlement and bankruptcy depends on your unique financial situation. If you have substantial unsecured debt and no realistic way to pay it off, filing for bankruptcy relief in Texas may offer a fresh start. However, if your debts are smaller and you have the resources to negotiate, working with a debt settlement lawyer in Corpus Christi could be a viable option.

When weighing your options, consider:

• The total amount of debt you owe.
• Your ability to pay off debts through negotiation or restructuring.
• The potential impact on your credit score.
• The urgency of stopping creditor harassment and lawsuits.

Learn what to do if you are accused of bankruptcy fraud. Please link to LFPA2.

Ready to Take Control of Your Financial Future?

Struggling with debt doesn’t mean you’re out of options. At the Law Office of Joel Gonzalez, we can help you explore the best path to relief. Whether you’re looking for bankruptcy lawyers in Corpus Christi, TX, or want to know more about debt settlement, we’re here to guide you every step of the way.

Contact us today to schedule a consultation and take your first step toward financial freedom.