Debt Settlement VS Bankruptcy

Pro's and Cons of Debt Settlement and Bankruptcy

If you have found yourself in a hole you can no longer keep up with payments on your credit cards and are searching for solutions or debt relief options. We would like to show the advantages of Debt Settlement as opposed to bankruptcy.

In most cases, Debt Settlement is the better option of the two choices. Debt settlement has become the most popular of the solutions due to the advantages relating to decreasing current payments and the reductions in outstanding balances of debt and paying off the debt quickly.

The two most common filings of bankruptcy are chapters 7 and 13. Of the two, chapter 7 is much more difficult to achieve. Before the law changes, chapter 7’s were immensely popular but since the changes, the choice of which of the two chapters would be available to the consumer is decided by the court. The guidelines for qualifying for chapter 7, however, are very stringent. If the court decides that a borrower can pay even one hundred dollars per month toward debt, the filing will automatically go toward a chapter 13 bankruptcy. In either situation, the borrowers are required to get credit counseling and budget analysis at their own expense.

Chapter 13, while providing some relief on current payments, is not nearly as consumer friendly as chapter 7 and carries disadvantages that convince many borrowers that the option is just not for them. The biggest disadvantage is that once the terms of the filing are set, a borrower’s finances can be overseen by a trustee of the court. The invasiveness of having an outsider involved in day to day or monthly budgeting becomes an immediate deal killer and typically turns the borrower toward debt settlement.

Top 10 disadvantages of Bankruptcy

1. Severe impact on your credit report and score. This negative mark also stays on your credit report for 10 years or longer.
2. A bankruptcy can stay on your public record indefinitely.
3. bankruptcy will affect your short-term future finances
4. Inability to obtain a mortgage for some time
5. In most cases, not all debt will be discharged
6. Because of bankruptcy law changes qualifying for Chapter 7 has become extremely difficult for consumers.
7. You could be forced to sell your assets and use that money to pay off your creditors.
8. It may be difficult to obtain a credit card for years.
9.The process is very unpleasant and you may experience embarrassment for quite some time
10.Many job and loan applications ask, “Have you ever filed bankruptcy?” Lying in your answer to this question on a mortgage application is a federal crime.

Debt Settlement Advantages

Top 5 Advantages of Debt Settlement

Debt settlement, also known as debt negotiation, is a relatively new and aggressive form of credit card debt relief offering many advantages over counseling, consolidation, and bankruptcy. The first and most immediate advantage is an approximate reduction of 50% on payments related to each account rolled into the debt settlement. Accounts which can be rolled into the settlement include credit cards, department store debt, unpaid utilities, medical bills, and other unsecured debt. Other advantages include:

1. Being proactive in pursuing a debt settlement can prevent wage garnishments and attachments – Letting creditors know that you’re in a debt settlement process provides assurance they are going to be paid a least some of their money. Creditors are unlikely to initiate any legal action while a settlement is under way.
2. Debt elimination – Outstanding balances can be reduced by 40 to 70%, depending on the creditor. On average, the collective accounts in a settlement will be reduced by 50%.
3. You will have added security for all your secured assets - Reducing payments and eliminating a portion of unsecured debt relieves pressure on secured assets. Debt settlements, for example, are being combined with loan modifications to help homeowners reduce their total payments toward debt and improving the chances of getting approved for new mortgage terms.
4. You will be able to completely pay off of all of your debt balances – After the debt reduction, payoff schedules are flexible but generally last no longer than 36 months. The same accounts maintained with minimum payments could take over twenty five years to pay off.
5 Faster improvement of credit scores - The settlement of accounts allows for borrowers to begin the process of re-building their credit scores faster than bankruptcy which can remain on a credit report for ten years and stay on your public record indefinitely.

Debt settlement/negotiation is becoming increasing popular with struggling consumers because of its advantages over every other form of debt relief including bankruptcy. Consumers should still familiarize themselves with all forms of debt relief before making a decision. If you’re being crushed by the weight of too many debts and you’re desperate to get out from underneath, debt settlement may be the right option for you. A good debt settlement company can help you lower the overall balance on you debts, potentially even combining multiple debts into a single monthly payment that is lower that all you exiting payments combined. debt settlement is an effective way to relieve your financial woes without declaring bankruptcy. If you want to pay your debts, but your payments are unrealistic, look into debt settlement options today.

Verdict: Debt Settlement is Preferable to Bankruptcy

The social stigma associated with bankruptcy is not entirely without cause. While bankruptcy may be necessary in extreme cases, the truth is that bankruptcy can ruin your financial life as well as your personal day to day life. A bankruptcy stays on your credit report for up to ten years and is visible to anybody who checks it. Bankruptcy is intended for people who cannot pay any of their debts. If you are willing to pay as much as you can, but need your debts to be lowered, then debt settlement is by far the better option.

Offering Professional Debt Settlement Help to 50 US States

List of States where we offer debt settlement