More specifically, if you've filed Chapter 7 Bankruptcy in the past 7 years, you may be out of luck. The main draw of debt negotiation for creditors is that they can recover a substantial portion of a bad debt that otherwise could and/or would be completely wiped out by bankruptcy. Unfortunately, if you've filed bankruptcy in the past 2 years, then you can't file again for another 5 years, so a creditor loses some of the incentive to negotiate a balance. That is, in their mind, they may be saying, "This person can't file bankruptcy anyway. What do I gain by lowering their balance?" That being said, even if you have filed bankruptcy in the past 7 years, a settlement can still be reached in some cases. Why? There are two reasons: a) a lot of times a creditor won't be able to collect the debt from you anyway because you may not have any assets or sufficient income, and b) having a sizable part of the balance in one lump sum is attractive when it means the creditor doesn't have to waste time and money chasing you down. Finally, the longer it's been since you've filed, the stronger your negotiating position may be. In other words, if it's been 6 years since you've last filed, then the time line when you're eligible for bankruptcy again is too short for some creditors to risk potentially losing everything by refusing a settlement.

The purpose of this article is to alert consumers to some important points about debt settlement, and although this may initially be alarming, Franklin Debt Relief still believes strongly in debt settlement as an alternative to bankruptcy.