Debt and money problems: bankruptcy, tax relief and disability benefits
When debts or tax bills become unmanageable, there are formal options. Some companies charge high fees for things you can do yourself, so it pays to know the landscape.
Bankruptcy
Chapter 7 can discharge many unsecured debts, subject to an income test. Chapter 13 sets up a repayment plan over several years and can help you keep a home. Both affect your credit for years. A bankruptcy attorney can explain which fits.
Debt relief and settlement
Debt settlement companies negotiate with creditors to accept less than you owe, usually after you stop paying them, which damages your credit. Under federal rules they cannot charge fees before settling a debt. Nonprofit credit counseling agencies offer debt management plans as an alternative.
Tax relief
The IRS offers payment plans and, in some cases, settlements for less than the full amount. You can apply for many of these yourself. Be cautious of companies that promise to cut your tax debt dramatically.
Disability benefits
Social Security disability applications are often denied at first. Lawyers and representatives who handle appeals are usually paid only if you win, with fees capped by law.
This guide is general information, not legal or financial advice.