Debt settlement vs Bankruptcy
Debt settlement is a program that helps those consumers who find themselves unable to pay the debts. Debt settlement programs are for those who are behind or in collections without any means to rectify the debt situation. Most consumers feel defeated and reluctant to enter into a debt settlement program, but ignoring the debt will definitely enter them into a court room setting. If nothing is done changes are that the consumer will be sued for nonpayment. This is not a good scenario by any means especially when it comes to one’s credit score. A debt settlement program will be very temporary compared to a judgment. This is just as devastating to ones credit as a bankruptcy.
The debt settlement program is design to assist the consumer by lowering their balances and making the debts more manageable. The balances are lower anywhere from 40 to 75 percent. Not only does this bring relief to the consumer but a sense of control on their situation. As the debts are settled the consumer will receive a low payment on the settled debts. The interest rates are also dropped making the debt easier to pay off. There are no prepayment penalties or fees if the consumer wants to pay off the debts or pay more on any given month. Chances are that the consumer ran into a situation that made it impossible to pay or keep up with their debts, but this is probably just temporary. Having the option to pay the debts off will be a great solution in the future when finances are looking better. The debt settlement program is a temporary setback to a never ending problem. If it is possible to do the debt settlement program before doing a bankruptcy it should be done.
Bankruptcy is a very serious solution to a financial hardship. If there is no other solution to your financial situation it can be beneficial. Knowing what to expect is very important before moving forward. If one is able to do a debt program before e doing bankruptcy it is recommended. When doing bankruptcy one is doing a very public and permanent financial move. If this is something that one feel is their only option it is understandable but the must know the consequences of what this move can do. Once the filing has taken place the information is recorded with the courts and it is accessible to any public establishment or private party. It would be extremely hard to get any type of credit or loan. The lenders do not want to take a chance with someone who has filed for bankruptcy. Other issues can arise as well such as applying for a job. The employer is able to access this information and it is possible that it can get in the way of receiving the job. Some may not have the choice but when possible one needs to try another solution. If bankruptcy is the only route then make sure that you know all that it entails.