subject: Compare Debt Relief Choices - Consolidation, Bankruptcy, Debt Settlement - Which is Best For You? [print this page] Compare Debt Relief Choices - Consolidation, Bankruptcy, Debt Settlement - Which is Best For You?
Debt relief comes in many hues and shades. It needs to be customized to your requirements. There can never be a common solution to all the problems. For each case of debt the peculiarities are different. You need to examine the peculiarities and decide a custom made solution in each case.
In a debt consolidation you go in to put all the debt under one head. Bruce has three Credit cards with different rates of interest. His rate of interest on American Express is the least at 12%. He needs to go in for debt consolidation and put all his debt under the American Express credit card. This will make sure that he has only one monthly payment to make. He will also save a lot of money on rates of interest.
Bankruptcy and settlement are options for those who are deep in debt and can not eliminate their debt by any other means. One of the basic requirements to qualify for debt settlement is you need to have more than $10,000 in unsecured debt. Bankruptcy is an official procedure to get over debt. It is a legal process and may take almost 6 months or more for the proceedings. Let us compare both the methods:
You need to qualify for both the methods.
Bankruptcy is a legal procedure where as a settlement is an out of court settlement.
All types of debt are not discharged by bankruptcy. All types of unsecured debt can be discharged by using a debt settlement.
Your credit score gets severely hammered by bankruptcy, where as a relatively lesser damage is done by a debt settlement. Conversely it takes about 1 to 2 years to recover from the effects of debt settlement and 7 to 8 years or may be even more to recover from the effects of bankruptcy.
Some states may not have any exemptions in bankruptcy. In that case you can even loose your house in case of bankruptcy.
Each case of debt relief needs to be considered on its own merits and demerits. Choose the solution that suits you the best.
Debt settlement is a viable alternative to filing bankruptcy. Most consumers are able to eliminate at least 60% of their unsecured debt while avoiding many of the negative consequences with filing bankruptcy. If you are over $10k in unsecured debt you will be eligible for debt settlement.
