subject: Debt Settlement Vs. Bankruptcy: Which Can Free You From Debts? [print this page] The increasing amount of debts in the country has alarmed many crediting companies. Many people are experiencing financial crisis because of credit card debts. Unfortunately, getting out of debts is a long and complex process that will require debtors to seek legal and financial help.
Like many debtors, you have probably considered two common options to fix your credit card debt. Many people are choosing either bankruptcy or debt settlement as a way to be free from debts, but legal experts believe that people need to be cautious in choosing the right procedure suited for them.
In the country, there are two types of bankruptcies acceptable by the law. Chapter 7 and 13 of the Bankruptcy Code are two different ways of filing bankruptcies; the right type of bankruptcy for the debtor is determined through his or her current financial status. Chapter 7 bankruptcy is recommended for only for debtors with insufficient funds, determined by their incapacity to pay for their basic monthly bills. On the other hand, Chapter 13 bankruptcy applies to debtors who have a number of assets they want to keep.
Another option for you is to settle your debts with their creditors. This can be done through hiring a
debt settlement agency that will serve as an intermediary between you and the creditor. These agencies will negotiate with your creditor to reduce the debt to an amount that you can afford. Debt settlement can help you save a significant amount of money on your debt payment.
Your debt settlement agency will create a trust account for you. The account will be used to pay your debts with your creditor. They will also negotiate your interests and your penalty fees into a reduced amount. Through this process, you will be paying a monthly amount without getting harassed by credit card collection companies.
Another advantage of debt settlement is that it allows you pay your debts in a short span of time. This means that in a span of one or two years (depending on the reduced amount and your capacity to pay), you will be free from your debt. Your debt settlement agency can also assure you that your credit scores will not be negatively tainted as your creditors will indicate that your debt is settled.
