subject: Debt Settlement Vs Filing For Bankruptcy - Why Debt Settlement Is Better [print this page] What is Debt Settlement? What is Debt Settlement?
Debt Settlement also know as Debt Negotiation has been around a long while, over the years, it process has gotten a bad reputation, often thought of as a SCAM. You would see ads in the newspaper or on the Internet promising to get you 50-60% off your credit card debt. Many of these shift company took advantage of people in trouble or who just didn't understand promising them big results and charging them big fees and delivering nothing. The process in truth was not at fault it was the companies. There was no regulation, no watchdog, and no laws. Many were closed some were even prosecuted. Eventually, these bad seeds were weeded out.
When the recession hit and the housing and job markets collapsed and consumers could no longer afford to pay their bills many people started looking for alternatives to bankruptcy to pay off their debts or to help reduce their debts. Even though bankruptcy is not new, it was complicated and expensive and required an attorney who specialized in these types of filings.
As bankers and mortgage companies looked for alternatives to foreclosure to help homeowners they turned to Debt Negotiating Companies who had expertise in dealing with financial institutions and negotiating reduced terms and payments.
Debt Settlement again starts to grow in popularity. Today it is the preferred method of dealing with unsecured debt. Do you have any other alternatives?
What is Bankruptcy?
Bankruptcy is when a person becomes insolvent, which means they no longer have the ability to pay their debts. In general there are two personal bankruptcy files. Chapter 7 and Chapter 13.
Chapter 7 bankruptcy, sometimes call a straight bankruptcy as a liquidation process. The debtor turns over all non-exempt property to the bankruptcy trustee appointed by the court who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick "fresh start". One of the main purposes of Bankruptcy Law is to give a person, who is hopelessly burdened with debt, a fresh start by wiping out his or her debts.
Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. Chapter13 bankruptcy is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.
Chapter 7 bankruptcy is what most individuals file. It sounds terrible, but it's not that bad you are allowed to keep your personal property, some furniture and appliances and inexpensive car. You are not thrown out on the street with just the clothes on your back. You complete most of the paperwork in your attorney's office and have a meeting or two with a court appointed trustee and then a court appearance and unless you have some complications the process is discharged and you can move forward.
There are many differences between Debt Settlement and Bankruptcy and there are pitfalls to both. You need to carefully evaluate your situation and get the help of a debt specialist.
Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate debt help in your state.
Debt Settlement Vs Filing For Bankruptcy - Why Debt Settlement Is Better
