Debt Relief Attorney in Fontana

Bankruptcy is one route out of debt. It is not the only one, and it is not always the right one. Hedtke Law Firm helps Fontana, Rialto, Colton, Bloomington and Jurupa Valley households work out which option actually fits — negotiation, settlement, Chapter 7 or Chapter 13. The first consultation is free, and if bankruptcy is not your best move we will tell you so.

Your Four Real Options

1. Do nothing (and understand what that means)

Sometimes the honest answer. If your only income is Social Security, disability or certain other protected benefits, and you own little that a creditor could reach, you may be what is informally called judgment proof — a creditor can sue and win and still collect nothing. That does not stop the calls, and it is not permanent if your circumstances change, but it means you may not need to pay anyone to fix this. Get advice before assuming it applies to you.

2. Negotiate or settle

Creditors routinely accept less than the full balance, particularly on older accounts already sold to a collection agency. Two things to know before you try:

• Forgiven debt can be taxable. A settled balance may be reported to the IRS as income. Debt discharged in bankruptcy generally is not. On a large balance this difference can outweigh the settlement saving entirely.
• Get every agreement in writing before you pay. It must state the amount, that it settles the account in full, and that the account will be reported as satisfied.

3. Chapter 7 bankruptcy

Discharges credit cards, medical bills, personal loans and most judgments, usually within a few months. California exemptions protect your car, household goods, tools of your trade and a substantial amount of home equity. Requires passing the means test. More on Chapter 7 →

4. Chapter 13 bankruptcy

A three-to-five-year plan for people who earn too much for Chapter 7, or who need to cure mortgage or vehicle arrears to keep the property. More on Chapter 13 →

Settlement vs Bankruptcy: An Honest Comparison

Settlement genuinely suits some situations — a small number of accounts, a lump sum available, no lawsuits pending. It suits fewer situations than the companies advertising it suggest.

Be Careful With Debt Relief Companies

There is a real industry built on people in your position. Some of it is legitimate. Much of it is not.

• Advance fees are prohibited. Under the federal Telemarketing Sales Rule, a debt relief company selling services over the phone generally cannot charge you before it has actually settled a debt for you. If someone wants money up front, that is your answer.
• The typical model is risky. Many tell you to stop paying creditors and pay into an escrow account instead. Meanwhile late fees and interest compound, your credit deteriorates, and any creditor is free to sue — which is how people end up garnished while enrolled in a program that was supposed to protect them.
• Nonprofit credit counseling is different. Legitimate agencies offer debt management plans and often free budget counseling. Worth a call before you pay anyone.
• Only a licensed attorney can give legal advice about which option fits your circumstances, or represent you if you are sued.

Debt Relief Questions

Is debt settlement better than bankruptcy?

Sometimes — typically where there are few accounts, a lump sum available, and no lawsuit pending. But settlement leaves you exposed to lawsuits and garnishment while you negotiate, and forgiven balances may be taxable. Bankruptcy stops collection immediately and the discharge is generally not taxable.

Can I settle debts myself without paying a company?

Yes. Creditors and collection agencies negotiate directly with consumers regularly. Get any agreement in writing before sending money, and never give a collector direct access to your bank account.

What is credit card debt relief?

An umbrella term covering negotiation, debt management plans through a nonprofit counseling agency, settlement, and bankruptcy. It is not a single product, which is exactly why companies use the phrase.

Will debt relief stop a wage garnishment?

Not reliably. Only bankruptcy stops a garnishment automatically and immediately, through the automatic stay. A settlement stops it only if the creditor agrees and releases the order. Stopping wage garnishment →

Does bankruptcy hurt my credit more than settlement?

Less clear-cut than people assume. Settlement usually involves months of missed payments and a settled-for-less-than-owed marker on each account. Bankruptcy is one entry, and the improved debt-to-income ratio afterwards often means people rebuild faster than they expect.

Find Out Which Option Fits — Free

Bring six months of income records, a rough list of who you owe and how much, and any court papers or collection letters. In one meeting you will know which of the four options above actually applies to you.

Hedtke Law Firm
7426 Cherry Ave, Suite 210-312, Fontana, CA 92336
Phone: (909) 457-0054
Monday to Friday, 9:00am – 6:00pm

Call (909) 457-0054

Serving Fontana, Rialto, Colton, Jurupa Valley and Bloomington.

General information about California debt relief and bankruptcy options, not legal advice for your specific situation. Tax treatment of forgiven debt depends on your circumstances — consult a tax professional.