Difference Between Bankruptcy And Debt Settlement

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The recent global fiscal recession had adversely affected people as a number of people had lost their jobs and were helpless in fulfilling their daily needs because of lack of finances.

The prevailing conditions have distressed people and made them incapable to pay their huge debts. The only solution most people can think of is bankruptcy to get rid of this problem. However, one must not forget that debt solution is a more amicable solution to this problem, so here’s an article that tries to compare bankruptcy vs. debt settlement.

You must think it out twice prior to applying for bankruptcy as there can be other alternatives too to solve the problem of increasing burden of debts. It is an absolutely extreme step to opt for bankruptcy.

It is better to seek for some relief from the debt by way of debt settlement than to declare bankruptcy and pay nothing, although the latter one may sound more convenient. The major problem with bankruptcy is the steep decline in the credit score.

Debt Settlement may be one of the various alternatives for bankruptcy. It may help in lowering your debts in a legal way and eventually come out of the debts by paying much less than you really have to pay.

Comparing Bankruptcy Vs Debt Settlement

Bankruptcy

The rules have changed now and bankruptcy has become a difficult task to achieve. There are two options for bankruptcy; you can either file for a chapter 7 or a chapter 13 bankruptcy.

Chapter 7 bankruptcy is based on average salary. If the salary of the debtor is higher than the average salary fixed by the state then he is not eligible for bankruptcy under chapter 7. You have to pay nothing if you qualify for bankruptcy. Though it seems suitable to debtors but it incapacitates you in seeking any loan or financial assistance any further. Ani Kuni

Chapter 13 bankruptcy enables the people earning more than average state income to apply for bankruptcy. But the repayments of debts don’t get abolished under this option. Though, your installments can be flexible.

Debt Settlement

The result of both the options, bankruptcy and debt settlement, is far different. Bankruptcy can make you debt free but you loose a lot of things such as your credit score, reliability in society, your credibility and chances to take any financial assistance in the future. Again it is not easy a procedure to declare bankruptcy.

Debt settlement, on the other hand, is a comparatively better option to consider while thinking of waving off the debts. It is better, in many aspects, from bankruptcy as it will not harm your credit score, can reduce your debt burden by more than 20%, and best of all your chances to get financial aid in future remains open.

It’s apt to conclude that in the bankruptcy vs. debt settlement comparison, debt settlement is the outright winner. Thus it is better to opt for debt settlement than to declare bankruptcy, in many ways. A debt relief consultant can be engaged to negotiate on your behalf to get the debts settled amicably.

Difference Between Bankruptcy And Debt Settlement

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