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Sunday, February 28, 2010

Bankruptcy vs. Debt Settlement

Bankruptcy vs. Debt Settlement

  1. Your credit is badly hit: Chapter 7 bankruptcy filing does have a negative effect on your credit. It brings down your credit score by around 200-300 points. Moreover, the negative entry stays on your credit report for 10 years thereby making it difficult for you to qualify for new loans and credit for the next 3-4 years.
  2. You may lose your property: There are certain assets which cannot be protected under bankruptcy laws. You are likely to lose such assets if you cannot avoid personal bankruptcy. This is so because the assets are sold off (if you've filed Chapter 7 bankruptcy) to pay back your dues. So, unless you qualify for federal/state exemptions, you may even lose your home/car if you're not avoiding bankruptcy.
  3. Not all debts can be eliminated: It's a myth that Chapter 7 can help you get rid of all types of debts. However, this isn't true because you cannot wipe out back taxes, student loans and other unpaid dues simply by filing Chapter 7. Thus, it makes sense to avoid bankruptcy. What you can do is contact a well established Debt Settlement Company .
  4. Creditors/lenders may repossess property: Even if you've filed bankruptcy, there's a chance that your creditors/lenders may repossess or foreclose property on which they hold a lien. This is because bankruptcy relieves you from the personal liability to repay debt. But unless you reaffirm and try to pay down the entire balance, creditors/lenders have the right to repossess or foreclose property as there's already a lien on it. Anything bought on Credit Cards is subject to being taken back by the Bank.
  5. Adverse effect on your finances: Bankruptcy has an adverse effect on your financial situation. For instance, you will have difficulty in buying or even renting a home/car. Filing bankruptcy can also influence the status of your security clearance. However, this will depend more upon whether you've filed bankruptcy on account of financial responsibility or due to an unexpected event.
  6. You may not qualify for new credit: Getting an approval for new loans/credit is tough after you've filed bankruptcy. It'll take at least 2-4 years in order to qualify for a secured loan (such as mortgage, car loan etc). Even unsecured loans are hardly available if you cannot avoid bankruptcy. However, you may qualify for a secured credit card. But you may have to pay higher fees when you apply for one.




Debt Settlement is the best way to set yourself in motion and relieves you from your past debt. A debt settlement program will offer you lower monthly payments which will be more convenient for you to pay the past debt. Hence, it will relieve you from the daily financial and emotional stress.

Debt Settlement programs reshapes your credit report and helps you in acquiring your credit worthiness. The main objective of this program is to restore your good credit rating in a faster and secure way.

The creditors appreciate your enrollment in a debt settlement program , as you have taken this responsibility to settle your outstanding debt and as a result they are willing to cut off the financial charges and the late fees accrued in your total debt, as well as settle your outstanding debt for as low as .20 cents on the dollar. Your credit report showing the debt has been settled will be viewed more favorably than before as long as you are in the program.

Comparing the debt settlement program with the bankruptcy, I strongly suggest you using a debt settlement program rather than filing for bankruptcy. Bankruptcy has devastating effects on your credit report and as per the new bankruptcy laws; a consumer after filing for bankruptcy is still required to pay his debt if he is capable enough to earn his livelihood.

Debt settlement programs have been the most popular and easiest way to erase all the past debts. This program will further provide you debt counseling and budgeting programs which will be helpful to you in managing your finance and achieve a debt free life much sooner.

If you feel this is something that interest you and you want to save thousands of dollars and at the same time keep your credit intact contact our office today for a FREE consultation with one of our friendly & knowledgeable Counselors

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