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Bankruptcy vs Debt Settlement

Are There Benefits To Bankruptcy vs Debt Settlement?

Many people find at some point that they have over-reached financially and they are having great difficulties in making the required payments to the institutions that they owe money to. At this point there are a variety of options that are available to you: you can either continue as you are, seek out debt settlement institutions for help or file for bankruptcy. Bankruptcy vs debt settlement can be a hard decision, but each has their own benefits and disadvantages.

Voluntary bankruptcy is filed when you do not have the means to pay your expenses and the money that you owe. In order to become bankrupt as judged by the courts, you have to show that you cannot pay for the owing money. If it is deemed that you are correct, then the court will make you bankrupt and this information will be recorded with the credit authorities in your country.

The benefit to becoming bankrupt is that you are not required to pay back the money that you owe to the banking institutions or lenders. The disadvantage of becoming bankrupt is that you are severely restrained in your ability to get finance approval for a number of different things. You may find it very difficult to get loans, credit cards, accounts with different companies and even rental accommodation.

Debt settlement is another option that may be available if you owe over a certain amount of money to lenders. This amount is normally around $10 000. The major advantage of debt settlement is that you can consolidate all your debts together with one institution and then make repayments that meet your budget. You do have to pay back the money, unlike with bankruptcy, but you will retain your credit rating and still be able to apply for loans and other types of credit. When you opt for debt settlement the company that helps you may be able to negotiate terms that involve paying less money than what you actually owe.

Before deciding which option you want to choose, you should make sure that you understand your financial predicament clearly and also that you know what each option fully entails.

You should also take a good look at your income and the amount of money that you have coming in each month. Are there areas where you can tighten your belt and reduce spending? Spend some time investigating a budget and how to reduce spending: there are lots of good websites that offer advice in this area.

If you decide to opt for debt settlement, then you should contact a few different companies in order to compare the services that they offer and any fees that they charge. It is always best to go with a credit card settlement company that is well established and has a good reputation. You should never have to pay large fees up front for their services.

There are different pros and cons to bankruptcy vs debt settlement and in order to choose the option that is going to suit your requirements best you should receive some independent financial advice. When you take control of your finances, then you will be able to live with less stress and stop worrying about the debt collectors.

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