Despite the fact that anyone who is deeply in debt wishes to escape bankruptcy, Americans are facing enormous financial challenges like never before. Unfortunately, many people believe that declaring bankruptcy is the only way out of their debt crisis. However, a viable bankruptcy option exists in the form of a debt settlement program. Debt settlement is a viable option for people who have experienced financial difficulty, have a heavy debt burden, and are on the verge of declaring bankruptcy. But why prefer this debt relief option over bankruptcy?
Avoid Bankruptcy at All Costs
Making a Chapter 13 bankruptcy filing is no laughing matter. While you are strategically using bankruptcy court to discharge your debt, you are still inviting a slew of out-of-pocket expenses. You would incur court fines, legal fees, and a slew of other unanticipated costs as a result of this expensive move, such as scheduling extra court dates.
You are no longer liable for the entire debt if you file for Chapter 13. Nonetheless, you must repay a portion of your loans within three to five years. Missing a court-ordered payment to the bankruptcy trustee, who is responsible for distributing funds to your creditors, will result in the dismissal of your court case.
Finally, a bankruptcy filing will stay on the credit record for up to ten years, creating a stigma that will make it very difficult to secure future loans or credit. As a result, the long-term consequences of bankruptcy will exact a heavy financial toll on you.
Debt Settlement – a Better Approach
In contrast to bankruptcy, debt settlement is a bankruptcy option that avoids any of the aforementioned implications of filing for bankruptcy. On the plus hand, settling your debt will significantly reduce your debt balances. You also have the option of paying off your debts quickly and at your own financial rate. In contrast, if you encounter another snag, you will slow down the speed of your repayment plan.
A competent negotiator negotiates with creditors on your behalf, which is one of the benefits of a debt settlement program. This saves you the trouble of having to deal with the complaints of pestilent debt collectors on your own.
A debt settlement program assists you in avoiding bankruptcy by allowing you to repay your unpaid debt in a significantly reduced, lump-sum payment. It is similar to Chapter 13 in that it assists you in satisfying your contractual commitments at a settlement rate that is pennies on the dollar. Settlements are usually reached for 30 percent to 40 percent of the overall balance owed. Finally, you reach an agreement on a more manageable payment plan, and if the settlement is settled in full, you are no longer responsible for the debt.
Furthermore, unlike bankruptcy, debt settlement has no negative effect on your credit score for ten years. When the lump sum payment is received, the creditor will mark the settled debt as “settled,” “paid in full,” or “settled for less than the full amount.” While this can stay on your credit report as negative news, the physical impact of paying off debt and getting it to a “zero” balance is an important credit scoring element. It refers to the credit scoring category of “debt-to-credit ratio,” which accounts for 30% of your credit score.
Choosing the Best Debt Settlement Company
It is possible to find a good debt settlement company online. However, exercise extreme caution when conducting your studies. Check their credentials before recruiting one. If possible, solicit consumer input. Finally, make certain that the company does not have a high number of consumer complaints.
If you don’t do your homework, you could end up with a lousy debt settlement company or one that is more interested in taking your money than in providing you with good service. As a result, exercise caution. Also, often compare prices ahead of time. Debt settlement costs can vary greatly from one service to the next.