Because of the economic recession and the wages that got lower and lower, most individual acquired debt they cannot pay. Many people became indebted to satisfy their basic needs or they simply believe that they will have it good in the future too. But times has changed, and it is now more difficult for people to pay their debts than ever. Because of this, the government has intervened for the people to be able to pay its debts and introduced a series of new laws that regulated debt. The state has given the debtors the options of bankruptcy and debt settlement. People do not know what to choose between the two options. Here are the 2 processes explained:
Bankruptcy: It is one of the oldest way of elimination of any debts. A person will never have debts if he gets bankrupt but the process has very grave consequences for the future. Bankruptcy makes a person to have a very bad credibility in front of future creditors. The process is very bureaucratic and it will take a long time before the person is absolved of any debt. The laws of bankruptcy are very difficult to understand and not many creditors will risk their money with you in the future.
Then there is debt settlement. This is the best way to deal with debt and it involves negotiating your debt with the lender. Usually, there are companies that do this for you and they charge a small amount of money after they negotiate your debt. You can get your debt reduced with up to 60% which means you actually have a chance to pay them. That way both the lender and the borrower are happy because the borrower must repay less money and the lender actually gets the money. If you have a large sum of money in a unsecured debt and you have trouble paying, you should check out debt settlement and see if you can qualify for it. In conclusion, it is preferable to settle your debt as much as it is possible instead of using bankruptcy.
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: