subject: Choosing Debt Settlement Or Bankruptcy [print this page] However, if the monthly income exceeds the basic living expenses, debt settlement can help resolve ones financial crisis. Settlement is the better option then. One should determine if one can pay their debts with their current income. If the income does not exceed the housing expenses, utilities, gas, groceries, and basic financial needs for the month, debt settlement is not a viable solution. Bankruptcy is the viable option then.
There are number of drawbacks of debt settlement programs such as the potential for increased creditor calls, possible collection lawsuits initiated by creditors, damaged credit and tax problems. If one does not think you can handle these possibilities, then one should probably look for another debt solution other than debt settlement. Probably bankruptcy
One has to determine if there are any other options for resolving ones financial crisis short of filing bankruptcy. One must look online for other solutions to debt problems such as debt settlement, debt management and nonprofit assistance. Attorneys who practice bankruptcy law have begun to offer debt settlement services to clients who might have filed a bankruptcy before the Bankruptcy Code was overhauled in October, 2005, and find the new laws too onerous.
Another important consideration is deciding whether filing for bankruptcy will resolve all credit problems or not. Depending on the different types and amounts of debts, a bankruptcy filing won't necessarily rid one off their duty to pay some of the bills. In such a situation debt settlement would prove to be the right.
One should keep in mind that a bankruptcy filing remains on the credit record for ten years but a bad debt is only supposed to stay on a credit report for seven!
These calculations are important for helping; formulate the decisions about filing for bankruptcy or seeking the aid of a debt settlement agency. Keeping a track of the credit report is very important so request a copy of the credit report from one or all three major credit reporting agencies in the U.S. The companies are Transition LLC, Equifax Credit Information Services, Inc., and Experian.
