subject: The Bad Economy and Consumer Debt - Avoid Bankruptcy by Understanding Your Debt Options [print this page] The Bad Economy and Consumer Debt - Avoid Bankruptcy by Understanding Your Debt Options
Over the past few years, the economy is going through a vicious circle and this mainly happened due to the recession. As soon as the recession hit the economy, people are deeply drowning into the pool of debts and the unemployment level has been increasing and income level is getting less than the expense level. People usually use credit cards to fulfill the daily expenses. Keeping and using plastic money is always a great advantage but paying it back is always a great hassle. People who find themselves in deep grave of debts mostly think to files for bankruptcy because according to them, filing for bankruptcy will help them in coming out of the pool of debts in a very short span of time. No doubt that filing for bankruptcy will lead the person to the path of debt relief but in the long run, this decision will cost them a lot in terms of bad credit ranking. In short, the decision of bankruptcy is never a sensible one. In fact, this is really an impractical decision.
In order to decline the ratio of bankruptcies or to avoid bankruptcy it is really important for the person to understand all the methods of debt relief that are easily available in the market these days. The aim behind the invention of these debt relief methods is to encourage the people for the settlement deals and discourage them to file for bankruptcy. Before selecting any particular method, it is important for the person to gather all the basic information and knowledge about that particular option. Debt consolidation and debt settlement are the two best possible ways for making adjustment with the credit card debts.
Debt settlement is the best way for handling the problem of massive credit card debts. With the help of this method, a person is able to come out from the pool of debts in a very short span of time. No doubt, credit ranking gets a negative impact, but once the person clears all the debts, the scoring will also get positive. These settlement firms manage the process of negotiation with the lenders on the basis of the borrowers. Effect of these negotiations is that a person is able to get 50% elimination in the outstanding amount easily.
Debt consolidation is another method for getting elimination of the unsecured debts. This method is also considered as the suitable alternative of bankruptcy. Since the consolidation process takes a lot of time, which is why people mostly prefer debt settlement.
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.
