subject: Credit Card Debt Bankruptcy - Why To Consider A Debt Settlement Procedure Before Filing Bankruptcy [print this page] Credit Card Debt Bankruptcy - Why To Consider A Debt Settlement Procedure Before Filing Bankruptcy
Credit card debt bankruptcy has become widespread after the economic meltdown. This has caused serious social and financial problems for the consumers. Once filed for bankruptcy, the consumers face unexpected financial troubles which stay for a long period of time. After bankruptcy, the consumers lose their credit score and they become sub-prime consumers. This is not the case with debt settlement. It is true that settlement is unable to wipe out 100% of the debt like bankruptcy but the other financial drawbacks which are present in bankruptcy are absent in settlement. This article makes an attempt to compare these two methods of debt elimination and explain why debt settlement must be considered prior to bankruptcy filing.
Bankruptcy is the longest method of wiping out debt. The time taken to complete bankruptcy filing is the maximum and can take more than 5 years to complete. On the contrary, the method of settlement is the fastest and this method takes a maximum of 3 years to complete.
There are a number of legal steps involved in the method of bankruptcy. Mostly it is found that the consumers are not very much comfortable with these legal steps and hence they face problems. However, in the method of debt settlement, there are no such problems. Either there are very less legal aspects involved or there are no legal hurdles at all. Even if there are some, the professional negotiator dealing with the case of a consumer will deal with the legal aspects without bothering the consumer.
The method of bankruptcy is not so easy. The consumers need to qualify for the same. They need to pass the means test. This is not the case with debt settlement. This means that there are no qualification criteria or tests involved. The only requirement is that the consumers must be in $10k of unsecured debts and that the debts need to be consolidated in one place.
In bankruptcy, the consumers lose their credit score for 7-10 years and during that period, they lose their eligibility to get fresh loans. This never happens with settlement. During settlement the credit score of the consumer goes down but it is reverted back to original level once the debt is settled and the remaining dues are paid off. The consumers do not suffer for so long and as soon as settlement is over, the consumers can apply for fresh loans.
It is because of these reasons it is argued that debt settlement must be considered before filing for bankruptcy.
With the new FTC laws recently passed, debt settlement is a legitimate alternative to filing bankruptcy. Creditors are ready to negotiate and now you won't have to pay a fee unless your debts actually settle.
