When you are experiencing serious financial difficulties, the piece of advice you get for your concern is to either file a bankruptcy or have a settlement with the creditors. Although both are debt elimination processes, if we draw a fair comparison between bankruptcy and settlement, there are merits and demerits of both.
Bankruptcy is a quiet simple process. You file your case. You give a small test to take the jury under confidence that you are unable to pay back your debt.
The next process is to defend your case in court, if you win the case. The debts which are dischargeable are discharged. It is through bankruptcy that you successfully get your whole debt amount wiped off. Looking at the other side of coin, the process does not end here. Now your credits will take 2-3 years to reestablish themselves. Filing a bankruptcy means no more debt for next seven years.
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On the other hand settlement helps to get out of the credit card debt through negotiations with your creditors. The settlement company never leaves the game unless they bring the debt reduced to 50-60%. Hence, give the relief to the consumer.
The typical fee of the settlement is 15% of your outstanding debt. When you register yourself to the settlement company, you successfully make a mutual deal with your creditors. It is not necessary that you pay that amount in lump sum. The debt can be divided in easy installment of almost a year or two. This is a small effort on part of Settlement Company to give you a relief. The remaining part of making monthly savings and paying your bills is obviously your responsibility.
You must take the decision wisely, before you sign in to a certain program. Do proper homework. Both the options are indeed going to have positive and negative aspects. But if you are good at taking the right decision at the right time, there is no doubt you'll get over your problems.
Talk to your bankruptcy lawyer to know about long term effects on your credits report.
Discuss with your financial advisor which one will be the best solution to you problem.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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