Where are many ways of eliminating liability and getting out of huge burden of debts. The fastest of these ways are bankruptcy and debt settlement. Before selecting any of the two options, one need to make sure that he is not only going for current benefits but h is even preserving future benefits. Bankruptcy and liability settlements have their own advantages and disadvantages. We need to figure out, which of these two options will be most effective while keeping the future in our mind.
Bankruptcy or insolvency is a legal way to get rid of huge amounts of debts. A law hearing takes place and the debtor gets rid of all the debt he owes. If he has any tangible assets to his name, these tangible assets are liquidized to pay of the creditors. If he does not own any tangible assets to his name then the creditor looses every penny. The advantages of this method are only short term which involves: fast liability relief and complete relief without making any payments to the creditors.
We should keep in mind that with bankruptcy comes along long term problems instead of benefits. These problems include: inability to acquire loan as the creditor hesitates in giving loans to those who have filed bankruptcy due to the threat of losing all the money lent. Even if the creditors agree to provide loan they do so on the basis of high interest rate, collateral, deposits and very less time to repay the loan. We should even keep in mind that employers provide employment on he basis of credit report. A person with a bad credit report might not b able to acquire a job and if he does then he is offered very low wages.
Liability settlement is another fast method to eliminate debt. In this method the debtor and the creditor negotiates with each other and a discount on the loan payment is given to the debtor this discounted amount is 70 % lower than the original amount. During negotiations the interest rates can be lowered and the repayment time period can be extended. The benefit of this option the creditor is that he gets some part of his money back.
The weak point of using this option is that the credit report of the debtor reports debt settlement. According to this reporting, creditors might hesitate in giving loan but will not hesitate as much as they would have if the credit report showed bankruptcy.
Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free.