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Comparing Settling Your Debt To Filling For Chapter 7 BankruptcyBankruptcy can
be a scary proposition. But despite that most financial experts
advise to use it only as a last resort, many consumers feel like
they need to consider bankruptcy to alleviate their financial
hardships. Families are becoming bankrupt at the staggering rate of
22,000 a week in the U.S. alone. That is over one million
bankruptcies a year. Debt
Settlement Can Ease Your Financial Nightmare
Debt settlement has increasingly become an acceptable way for individuals to take care of their financial burdens and has allowed millions to get their monetary situation under control without the havoc that filing for bankruptcy causes. While bankruptcy may free you from having to pay a majority of your debts, the road to recovery in repairing your credit history is long and arduous.
Many people
never fully recover from a bankruptcy judgment, but with debt
settlement, you or a company that you hire to act as your agent
works with creditors to resolve the issue at a much reduced rate.
Typically, these negotiated resolutions can be in the neighborhood
of 40-80% less than the original debt.
And while it takes seven years to erase bankruptcy from your
credit history and may have a negative effect on your credit rating
for up to ten years. With debt settlement most issues can be
completely cleared up in 1-3 years depending on what you owe,
although early payment is certainly acceptable, after which time you
can instantly begin rebuilding your good financial name.
Most
creditors prefer the debt settlement scenario as they would rather
see some money toward what they are owed. With debt settlement they
will obtain at least a portion of the outstanding amount due where
as with bankruptcy they will most likely receive nothing. Also keep
in mind that bankruptcy will not erase back taxes, student loans and
child support or alimony in arrears. Plus, bankruptcies most often
require the services of a high priced lawyer. With debt settlement
you hire a firm to make the negotiations on your behalf and act as a
liaison between you and the creditor to set up a payment plan that
is acceptable to both parties. A Better
Solution
Debt settlement
is the better option for most individuals or families currently in a
debt crisis. It will not erase the bills that you owe as bankruptcy
does but it will reduce the debt you have to repay by a substantial
amount. Even creditors nationwide are now warming to the prospect of
debt settlement, especially for unpaid sums that are from previous
years and are no longer current. In the end you will find that debt
settlement is the much more viable option than bankruptcy, unless
you can’t make any payments at all
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Debt Settlement vs. Bankruptcy
For most consumers living in the US,
having debt is considered a norm and part of our daily lives. But too much
debt can make life very difficult to enjoy. There are 2 potential solutions
that can be weighed to solve your this problem include debt
settlement and bankruptcy. Consider them carefully
before committing to either.
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