Many who want a respite from debts mainly consider two ways. One is Bankruptcy and the other is debt settlement. Both these methods are effective as well as legal way of getting out of debt. However, not all can be eligible for these debt relief options. These methods have their own pros and cons which needs serious consideration before either is opted for.
There have been a lot of changes made in the bankruptcy laws over the past decade. Now it is not easy to qualify for bankruptcy due to these changes whereas anyone who had unsecured loans in the range of ten thousand dollars or above can qualify for debt settlement.
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If you are eligible for bankruptcy then all your assets will be auctioned in order to pay off your debts to maximum possible extent. No credit company will then be able to demand payment from the debtor after he has filed for bankruptcy. In debt settlement, a debtor can negotiate a reduction in the total outstanding amount. Generally this reduction varies in the range of 40 % to 60 % of the total outstanding amount. The remaining will then have to be paid by the debtor within a given duration of time failing which he is at a risk of law suit.
The entire process of bankruptcy is very complicated and requires a mandatory presence of a qualified lawyer. Hence the entire procedure becomes costly. The debt settlement process on the other hand is a straight forward process which can be dealt with by the debtor himself.
Filing for bankruptcy has a major negative impact on the credit report of the debtor. Bankruptcy shows on the credit report for a minimum of 10 years. Debt settlement also has negative impact on the credit report however it comes off in 7 years.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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