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What are your options for settling your debt in Pennsylvania?

On Behalf of | Jun 12, 2023 | Bankruptcy Law

Pennsylvania has several debt relief options that make it possible for you to pay off your debt. High interest rates could cause you to feel as if it’s impossible for you to be free from the debt. Some debt relief options resolve this problem through a lower interest rate or repayment of the debt.

Debt management

You could ask your creditors to reduce your interest rates. This would make it more manageable for you to pay off your debt. Some creditors may reduce your interest rate to 8%. There’s a monthly fee of around $40 to stay on a debt management plan.

Debt settlement

If you have a lot of debt, then debt settlement might be a suitable option. A debt settlement company would negotiate with your creditors, and you would make a monthly payment into an escrow account. Once your escrow reaches the settlement amount, then the company would release it to your creditors. If you were able to pay off your debt at a lower cost, then the IRS will tax the remaining amount as income.

Non-profit debt settlement

If you have more than $1,000 in credit card debt and your accounts are more than 180 days overdue, then you may qualify for non-profit debt settlement, also known as credit card forgiveness. Under this plan, you would pay an agreed-upon amount every day for the next 36 months or until you finish paying it off. The IRS taxes forgiven amounts that exceed $600.

Debt consolidation

You may be able to obtain a loan from a bank, credit union or an online lender to pay off your debts. However, you would have to pay off the debt consolidation loan. You usually need to pay off the loan over a 3–5-year period.


When all other options fall flat, you might consider bankruptcy. There are two forms of bankruptcy that are commonly used by individuals: Chapter 7 and Chapter 13. Most residents in Pennsylvania opt for Chapter 7, which liquidates your non-exempt assets to pay off your debts. Bankruptcy law allows you to keep your primary residence, car and other necessities. A Chapter 13 bankruptcy restructures your debt into a 3–5-year repayment plan.

Your current financial situation and the type and amount of your debt influence which debt relief option you may find best. You might want to estimate the costs of each method before making a decision.



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