Out of the many debt relief measures, settlement and bankruptcy is a measure widely practiced by the people in debt.
Consolidation is a process used for consolidating for secured as well as unsecured debts.
Settlement on the other hand is used to settle unsecured debts like credit card, personal loan and utility bills.
Settlement is a widely used measure for settling card debts.
Card debt has piled on the economy in huge amount.
It is extremely necessary to bring it down either by making regular payments or by settling bills which are long overdue.
The current status of economy has added to this process of card delinquency.
People have not paid back due to extended job loss or wage cuts or medical emergencies in the families.
In a desperate measure to come out of the situation people have gone ahead and tried to file for bankruptcy.
The more thoughtful have come up with more sustainable solutions and have tried to settle their account with the help of settlement companies.
The companies help the customer to realise the gravity of their situation and put them on a program which avoids further debt.
In the next phase the company goes ahead with the process of arbitration where the creditors are asked to rework the debt bill and lower down the interest rate of payment.
The creditors are made to realise that the customer needs help in settling his bills or he would have no option but to file for bankruptcy.
A comfortable mode of payment is established which helps the customer to eliminate major portion of his debt and repay the creditors and become debt free.
Settlement is a measure which puts the customer back on healthy financial ground over a period of two to three years of time.
He reworks on his credit score and becomes fit for the credit market.