Debt Settlement Vs Filing Bankruptcy - Why Bankruptcy Should Always Be The Last Option?

Debt Settlement Vs Filing Bankruptcy - Why Bankruptcy Should Always Be The Last Option

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Over the past few years a lot of unsecured loans are issued to people. Many individuals are taking money from banks in order to meet their expenses and other needs of life. Taking or borrowing money is not a difficult task but paying it back is really a big problem. Due to recession, people are facing many problems in paying the bills. To overcome the problem of massive loans, the federal government introduced the option of debt settlement and bankruptcy. These both methods are good at their respective places. In this given article you will come to know about the pros and cons of each method.

Debt settlement is the modern approach for the elimination of debts while on the other hand bankruptcy is the traditional way for the reduction of unsecured liabilities. Little paper work and other official documentation are involved in case of financial settlement. In bankruptcy many legal tests and other official documentation are involved. Debt settlement is not a lengthy process while bankruptcy is a lengthy process. The settlement companies charge very minimum and affordable amount of fees. These companies are legally accountable for charging fees only after delivering the services properly. The bankruptcy lawyers are expensive as they ask for huge fees in return of their services. Debt settlement brings negative impacts on credit report of a person but this impact is only for a short period of time and as soon as the person clears the debt, the impact will be washed out. The negative impact that bankruptcy brings to credit report will stay for almost seven to ten years. The new laws of settlement are making this process more genuine and reliable while on the other hand the new rules and regulations of bankruptcy are making this process more complicated and difficult. The process of settlement is favorable from both lender's and borrower's end while the process of bankruptcy is considered total loss for both parties.

It is advisable that a person should always go for settlement deal at first place and if he is not satisfied by the results of settlement then he can adopt the option of bankruptcy.

If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals.

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