Most of the consumers struggling with the burden of debt and want to get rid of it either opt for settlement or Bankruptcy. One would say that debt settlement is bay far a better option than bankruptcy for many reasons.
Since both the methods have their pros and cons it is always beneficial for the customer to be aware of them before makes his choice.
Bankruptcy: This is a very lengthy and time taking procedure which requires a huge amount of documentation. Over the decade there have been changes made in the bankruptcy laws due to which qualifying for bankruptcy is no longer an easy task. You will need to hire a lawyer to handle your case and this is very business. A person already facing financial difficulties might find this added expense hard to bare. The last but the most powerful disadvantage is the negative mark that it leaves on your credit score.
Debt settlement: This is a better option than filing for bankruptcy for many reasons. Firstly it does not involve complicated procedure which an individual cannot handle without professional help. The fees charged are also nominal. Settlement does impact the credit rating but not as much as bankruptcy. But the difficulty is that not everyone can qualify for settlement. A person needs to have at least ten thousand dollars in unsecured debt in order to avail settlement program. This is not helpful if majority of your debts are in the form of secured loans.
For those who do qualify for settlement, they should opt for it rather than bankruptcy. People have been able to negotiate a waiver of up to 60 percent on their credit card debts. The remaining 40 percent can be paid off in monthly instalments.