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Most debtors feel and should feel that Bankruptcy is the last option they have. Even though Bankruptcy can ruin your credit for years to come sometimes it is much better than being enrolled in Debt Relief programs like Debt Settlement when your debt is huge. Though every Debt management Program has pros and cons let us see if Bankruptcy is an alternative to Debt Relief.
1) Cost of Debt Settlement VS Bankruptcy: Filing for Bankruptcy is cheaper than debt settlement. Debt settlement companies often charge you a fixed fee or a percentage of the amount of money you save. So a better settlement would mean you end up paying more to the Debt Settlement companies.
2) You have to keep paying in Settlement: In case of Bankruptcy like chapter 7 your debts are wiped away once and for all. The creditors cannot legally harass you for any kind of collection and the attorney becomes the point of contact. In case of debt settlement the debts are settled one at a time and even though you are enrolled in a program it does not stop collection calls permanently. The chances of all creditors agreeing to your negotiations are remote. Incase you drop out of a settlement program the penalties, charges and harassment will be more.
3) Legal Protection: Bankruptcy legally protects the debtor whereas debt settlement has no protection from law and the debtors are at the risk of being sued by the creditors. The debt settlement companies most of the time are under no legal obligation to represent you in case you are sued.
4) Impact on Credit Score: The chances of a better credit score after Bankruptcy are higher then incase of debt settlement. A charge off stage in your debt could mean you are far behind in your payments and this would affect the credit score badly. The situation as discussed above gets even worse if you drop out of a program.
5) Which of the two makes more sense to YOU: Bankruptcy makes more sense for the debtor as they are legally protected, do not pay their debts and the debts are completely wiped off. Debt Relief measures are creditor centric and even though they are getting paid you can be sued and could end up paying more. The creditors are not bound to agree to your negotiations and can always demand full money until and unless they agree to your negotiations.
Bankruptcy or Debt Relief the option is to be chosen by the debtors. Both have drawbacks and expert opinion and research can suggest what options suits your type of debt.
Most debtors feel and should feel that Bankruptcy is the last option they have. Even though Bankruptcy can ruin your credit for years to come sometimes it is much better than being enrolled in Debt Relief programs like Debt Settlement when your debt is huge. Though every Debt management Program has pros and cons let us see if Bankruptcy is an alternative to Debt Relief.
1) Cost of Debt Settlement VS Bankruptcy: Filing for Bankruptcy is cheaper than debt settlement. Debt settlement companies often charge you a fixed fee or a percentage of the amount of money you save. So a better settlement would mean you end up paying more to the Debt Settlement companies.
2) You have to keep paying in Settlement: In case of Bankruptcy like chapter 7 your debts are wiped away once and for all. The creditors cannot legally harass you for any kind of collection and the attorney becomes the point of contact. In case of debt settlement the debts are settled one at a time and even though you are enrolled in a program it does not stop collection calls permanently. The chances of all creditors agreeing to your negotiations are remote. Incase you drop out of a settlement program the penalties, charges and harassment will be more.
3) Legal Protection: Bankruptcy legally protects the debtor whereas debt settlement has no protection from law and the debtors are at the risk of being sued by the creditors. The debt settlement companies most of the time are under no legal obligation to represent you in case you are sued.
4) Impact on Credit Score: The chances of a better credit score after Bankruptcy are higher then incase of debt settlement. A charge off stage in your debt could mean you are far behind in your payments and this would affect the credit score badly. The situation as discussed above gets even worse if you drop out of a program.
5) Which of the two makes more sense to YOU: Bankruptcy makes more sense for the debtor as they are legally protected, do not pay their debts and the debts are completely wiped off. Debt Relief measures are creditor centric and even though they are getting paid you can be sued and could end up paying more. The creditors are not bound to agree to your negotiations and can always demand full money until and unless they agree to your negotiations.
Bankruptcy or Debt Relief the option is to be chosen by the debtors. Both have drawbacks and expert opinion and research can suggest what options suits your type of debt.