Sometimes a common consumer may end up in a financially difficult situation due to various reasons.
One of them could be a sudden illness requiring expensive treatment or surgery.
The consumers may find themselves faced with huge debts.
It may be impossible to pay of all the debts over any reasonable period of time.
In desperation a debtor may consider bankruptcy as the only option.
But bankruptcy has its negative consequences.
It can ruin a debtor's credit scores for the next ten years and it will become impossible to him or her to avail any credit in the future.
Even in bankruptcy the debtor cannot fully avoid paying off the loans.
In case of bankruptcy, all a debtor's assets are liquefied to pay off as much of the debt as possible.
In fact nowadays, it is possible to avoid bankruptcy completely and become debt free at the same time.
This alternative is in the form of various settlement programs.
In order to enroll in one of these programs a debtor can hire the help of any good settlement company.
If the debtor cannot afford the fees of these companies, he or she can approach one of the many non profit debt relief networks.
These networks provide debt settlement guidance free of cost and char out a debt settlement program for the debtor.
The debtor can then negotiate with the creditors and reach a settlement amount which is much lesser than the original amount payable.
The creditors usually decide upon this amount by assessing the debtor's actual paying capacity.
The unsecured loans can be converted into secured ones which have a lower rate of interest.
The debtor can consolidate the loans and decrease the rate of interest further.
These factors make settlement a very good alternative to bankruptcy.