Bankruptcy Vs Debt Negotiation - Which Debt Relief Option Makes Financial Sense to You?

Bankruptcy Vs Debt Negotiation - Which Debt Relief Option Makes Financial Sense to You

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In any debate over Bankruptcy Vs Debt negotiation the latter option will take the cake. Of the many procedures of debt elimination, bankruptcy is one, and debt negotiation is the other. Bankruptcy may eliminate debt but it is definitely not a good debt relief option considering all the ill effects it comes with.

Bankruptcy can be filed under chapter 7 of US bankruptcy laws. One can file bankruptcy only when he or, she is eligible for it. In this case the person concerned will be free of the debt, but all his or, her salable assets will go under a trustee who may auction these assets and use the money raised to pay the creditor. One may loose his house also in this process.

The next best and sensible debt relief option is debt negotiation. This widely accepted process is much more meaningful than filing bankruptcy. In this method the debtor and the creditor come to an agreement on how much of the total debt is to be paid, when and how. This is a lengthy process and a tiring one too.

Debt negotiation is more acceptable to the creditors also, especially when the creditor is not the original creditor (OC) but a collection agency. These agencies buy loans from the OC in less than 7 cents per dollar and try to force the entire payable amount out of the debtors.

The people in general are now enlightened about all these little tricks and can hold their ground in case a settlement has to be reached. It is wise to start the negotiation by agreeing to pay 25% of the total debt amount or, lesser. The longer the bargain the lower will be the amount charged. In this way, many aggrieved individuals have not only been able to pay their debt back but also in an unimaginably low amount.

Debt negotiation not only gets a discount on the loan it also specifies a time period after when the loan repayment of the settled amount will commence. So if the person is out of job, he can find himself one by that time. He can also find alternative ways of income to take care of his basic necessities.

There is another reason why in the debate of bankruptcy Vs debt negotiation, the latter will emerge victorious. It is easier to get rid of a bad mark in the credit report in case of debt settlement. In case of declaration of bankruptcy, the negative mark remains for more than 7 years (sometimes 10) which is undesirable to any consumer.

The creditors have also realized that getting something out of the debtor in due course of time is much better than forcing the latter to choose bankruptcy as an alternative, which will benefit neither of them. So if someone close to declaring bankruptcy, is still in two minds about any other debt relief option, they can always go through the debate over bankruptcy Vs debt negotiation and choose the latter.

Debt settlement companies are widely available in just about every state however some are just flat out more experienced than others in debt negotiation. That's why it's so important for consumers to use debt relief networks. These networks qualify and only accept the best performing debt settlement companies.

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