Bankruptcy Alternatives - How Debt Settlement Companies Are Helping Many Defeat Debt

Bankruptcy alternatives have become much more popular than ever before

. This has happened because, bankruptcy as an option of debt elimination has a number of problems associated with it. These problems are discussed below:

* Filing for bankruptcy has become difficult because now a consumer needs to qualify for the same. He or she needs to go for credit counseling. The counselors judge the situation of the consumer based on the income source and the expenditure habit of the consumer. If the counselors think that the consumer is in a position to repay the creditor, he or she is not allowed to file for bankruptcy.

* Bankruptcy filing means that a consumer loses his or her credibility and fails to get any further credit for the next 7-10 years. This happens because the report of bankruptcy filing shows up on the credit history for that period of time.

* Even after that period of time, the consumer suffers as he or she becomes a sub-prime consumer and can get further credit at interest rate which is higher than the normal market rate of interest.

Debt settlement is the most popular alternative to bankruptcy. This method eliminates the problems which are associated with the traditional method. The debt settlement companies are helping many consumers to defeat debt. The consumers who have a credit debt of $10K or more can approach the settlement companies for help. A professional negotiator from the company selected by a consumer will advice the consumer to go delinquent. After the creditor stops receiving money from the consumer, it waits for 3-4 months and then sells off the debt to a collection agency for as little as 20-30 cents on the dollar. The professional negotiator then contacts the creditor and offers a better price of 40-50 cents on the dollar. The creditor then finds the deal to be a better one because it will mean 100% return on investment for the collection agency. The creditor agrees to the deal and eliminates at least 50% of the debt that the consumer has. This is how debt settlement companies are helping many defeat debt by using bankruptcy alternatives.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement.

Bankruptcy Alternatives - How Debt Settlement Companies Are Helping Many Defeat Debt

By: Arvel Bert

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