Many consumers find Bankruptcy as their first choice when they cannot meet their minimum monthly payments.
This option has become popular widely due to the economic recession.
Many credit card holders became vulnerable to bankruptcy due to the overwhelming financial pressure.
Another popular alternative to indebtedness is debt settlement.
Before choosing one alternative from these, it is worthwhile for you to know about the plus points and the minus points of both the options.
Bankruptcy as an alternative! Read up on the Bankruptcy law and determine whether you are qualified to file a bankruptcy.
For this, you have to spend a considerable time reading the Bankruptcy code.
The only advantage of bankruptcy is that it stops all the current actions against the debtor.
The most severe damage is done only to your credit report.
Under the fair 'Credit Reporting Act' the black mark of bankruptcy will stay for another 10 years in your credit report.
They are matters of public record and you will not be able to obtain any loan in future.
If you are in need of a loan, you have to obtain the permission from the 'Bankruptcy Court'.
Besides, the damage it causes to your reputation may help the society to label you as an 'irresponsible' man.
Debt Settlement as an alternative! Debt Settlement is considered positive and chosen as a 'better' solution compared to bankruptcy, mainly because of its less impact on the consumers 'credit report'.
The remarks of debt reduction programs will stay only for a period of 3 or 4 years.
But in some cases, the creditors even agree to report the 'credit bureau' that the particular debtor has successfully settled his/her dues.
Additionally, it will safeguard your reputation as a 'responsible' consumer which in return guards the creditor consumer relationship.
In simple terms, debt settlement is an encouraging and positive way to build your broken financial fortress.
Nevertheless, the free credit counseling they offer will give an insight for you to reform your spending habits.