Bankruptcy Or Debt Settlement - Help With Choosing the Right Debt Relief Option
Bankruptcy is a permanent form of debt relief.
All your assets shall be liquidated and all your liabilities shall be discharged.
Once you use this option, you will be back to zero and you just have to start all over again.
Needless to say, your creditors will not appreciate your decision and will punish you by imposing a negative credit report.
On the other hand, debt settlement involves negotiation with the lenders and reduction of the total amount owed.
In most cases, the discount percentage ranges from 30%-50% of the original amount owed.
You can also get a 70% discount if the amount owed is very high and if you prove that you are in need of the same.
Both the options help you get rid of debt.
One exchanges your assets in exchange of the relief.
The other makes use of 70% discount and a 30% repayment to help you get rid of debt.
Which one should you choose? Which one can be considered the right debt relief option? Anything other than bankruptcy will require a steady income from your side and a lot of discipline.
If you are not earning steady income, chances of making regular repayment is very remote.
If you and your spouse unemployed and if you are practically living on the favors done by your friends and relatives, then it is obvious that you will have to file for bankruptcy.
On the other hand, if you are earning a sufficient and steady income but if you have misuse your credit card and if it has risen to unmanageable levels, then you can opt for a debt settlement.
Hence, if you have a steady source of income, you should consider debt settlement first.
The second point you should consider is your creditor score.
There is no point in saving your score and report when bankruptcy is on your head.
In all probability, your financial mismanagement would have had a negative impact already.
If not, then you should check whether debt consolidation and other such solutions dependent on a high score are available.
If yes, then you should proceed and choose those relief options.
If not, then you only have settlement and bankruptcy left open to you.
In any case, it is always advisable to make use of a settlement company to find out whether you qualify for this debt relief option before choosing any other solution.
All your assets shall be liquidated and all your liabilities shall be discharged.
Once you use this option, you will be back to zero and you just have to start all over again.
Needless to say, your creditors will not appreciate your decision and will punish you by imposing a negative credit report.
On the other hand, debt settlement involves negotiation with the lenders and reduction of the total amount owed.
In most cases, the discount percentage ranges from 30%-50% of the original amount owed.
You can also get a 70% discount if the amount owed is very high and if you prove that you are in need of the same.
Both the options help you get rid of debt.
One exchanges your assets in exchange of the relief.
The other makes use of 70% discount and a 30% repayment to help you get rid of debt.
Which one should you choose? Which one can be considered the right debt relief option? Anything other than bankruptcy will require a steady income from your side and a lot of discipline.
If you are not earning steady income, chances of making regular repayment is very remote.
If you and your spouse unemployed and if you are practically living on the favors done by your friends and relatives, then it is obvious that you will have to file for bankruptcy.
On the other hand, if you are earning a sufficient and steady income but if you have misuse your credit card and if it has risen to unmanageable levels, then you can opt for a debt settlement.
Hence, if you have a steady source of income, you should consider debt settlement first.
The second point you should consider is your creditor score.
There is no point in saving your score and report when bankruptcy is on your head.
In all probability, your financial mismanagement would have had a negative impact already.
If not, then you should check whether debt consolidation and other such solutions dependent on a high score are available.
If yes, then you should proceed and choose those relief options.
If not, then you only have settlement and bankruptcy left open to you.
In any case, it is always advisable to make use of a settlement company to find out whether you qualify for this debt relief option before choosing any other solution.
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