Bankruptcy Alternatives - Why Debt Settlement Is A Less Risky Option
Bankruptcy Alternatives - Why Debt Settlement Is A Less Risky Option
Bankruptcy is a terrifying word. It means that an individual can no longer pay its bills. That is really scary but with the current economic times that is where many consumers are finding themselves.
Bankruptcy has always been a long hard process but President Obama has made it even longer and harder. The media is blaming consumer bankruptcy for the recession and so President Obama had to do something. He implemented new laws to encourage other legal ways out of debt. These are more ethical and do not have such a detrimental effect on the consumer's credit.
In the old days those debtors who could no longer pay off their debt had to file bankruptcy. It takes forever to get ready to go to court, there is endless paperwork, long court hearings and is just a total waste of time.
In most states those consumers that want to go under bankruptcy must first undergo counseling. The debtor has to face poor credit rating, bad social representation, and financial insecurity. Why would you choose to put yourself through that?
There are three plans. They are debt consolidation and debt settlement. Debt settlement allows you to settle your debt often at 50% of what they currently owe.
Under debt negotiation you start by paying a fixed monthly amount to the company which puts your payments into an account where it adds up. The company will negotiate with your creditors on your behalf and you will then stop paying your creditors. Generally you will end up paying between 35% and 70% of the outstanding balance. The money is held in an FDIC insured account for you. The account is in your name. You can withdraw all your money at any time and stop the plan.
Debt settlement is a legitimate alternative to filing bankruptcy. Consumers can expect to eliminate around 50% of their unsecured debt with the help of a legitimate settlement program. With the new FTC laws recently passed in July 2010, debt settlement is a much less risky option. If they don't settle your balance you don't have to pay a dime.
Check out the following link for free help from a certified debt relief specialist: