subject: Debt Relief Services – Is Debt Settlement A Favourable Alternative To Bankruptcy [print this page] Debt Relief Services Is Debt Settlement A Favourable Alternative To Bankruptcy
Unsecured debts such as credit card bills and medical bills are one of the biggest worries of today's customers. With credit cards being so easily available a consumer falls prey to these unsecured debts at a very young age were they do not have the discipline of spending.
Under such conditions, it is necessary to know of the different debt relief services which a consumer can avail. This can be a tricky problem as not many consumers know about the different alternatives which are available or who can assist them with this problem.
Most consumers are aware of bankruptcy and its effects. However, they are not very sure about the other alternatives they can avail. In this article we will focus our discussion on how debt settlement is a more favourable alternative to bankruptcy.
Debt settlement is an alternative which offers you the opportunity to resolve your debt issues for a reduced amount. In this process the creditors and the debtor will agree to settle the debtors account for an amount less than what is actually owed. Averagely, you can get a reduction of 40% to 50% of the total amount. However, this might not be the case always. Creditors are not legally obliged to settle debts with their defaulting customers. Debt settlement impacts the credit rating negatively but so does late payments. Some of the key reasons which help debt settlement score on bankruptcy are:
Court appearance not required: Since this is a procedure involving only the creditor and the debtor hence there is no lengthy paper work or court appearance required.
Retain assets: A straight Bankruptcy or chapter 7 bankruptcy requires liquidating all valuable assets. This procedure is not required in a settlement process as you come to a settlement decision through mutual agreement.
Affect on other account: A debt settlement usually has no effect on other accounts that you have with other creditors and can keep them open. After a bankruptcy you would have no credit accounts open.
Most financial advisors would vote personal bankruptcy as the last resort for debt management. People opting for bankruptcy are discharged from their debt duties. However, it stays on the credit report for the next 10 years. During this time you will find that getting credit in the market will be a major problem. However, this is a legal way of making a fresh start for those who are really in a financial mess.
