Article by Natalie Johnson
Deep in debt? Are you sinking fast with no way out? Have you accepted that there is NO WAY on Earth you’ll ever pay down the debts you have?
If so, you’re thinking: Should I file bankruptcy or give debt settlement a try?” Here’s the low-down on debt settlement versus bankruptcy.
Bankruptcy Any professional will tell you to make every effort to avoid bankruptcy. A bankruptcy is perhaps the single most damaging item one could have on a credit report and it’s one of the most stressful, emotional experiences a person could go through. – Particularly if you are forced by the court to lose your home.
When you file for Chapter 7 bankruptcy you are asking the court to discharge the debts you owe. In exchange for having your debts discharged, a judge will appoint a bankruptcy trustee to sell your property and distribute proceeds from the sales to your creditors.
Don’t worry – you won’t lose everything – certain personal property items might not be sold or taken. – Including furnishings and retirement accounts…Phew!
Chapter 13 is similar to Chapter 7 bankruptcy in that a judge will discharge your debts but the process by which those debts are discharged is quite different. In a sense, bankruptcy under Chapter 13 is a debt consolidation. With the help of a court appointed trustee you will work with your creditors to negotiate new terms. This could include negotiating a lower pay off amount or a lower interest rate and sometimes the forgiveness of late fees.
The court determines the disposable income amount you are to pay the trustee each month. Next, the trustee distributes your payment to the creditors. Although this option sounds much better than filing for Chapter 7, keep in mind BANKRUPTCY will still appear on your credit report.
Debt Settlement Debt Settlement is much like a Chapter 13 bankruptcy. You will negotiate with your creditors for a lower balance and forgiveness of fees. You could pay as little as .10 on the dollar for your debt.
You will need a little bit of cash if you go this route. Creditors might drastically reduce your debt for only if you pay what they want in full. You won’t be offered a payment plan but you will probably be able to negotiate how the creditor reports your account to the credit bureaus.
The biggest reason you should try debt settlement instead of bankruptcy is because it won’t damage your credit nearly as severely as a bankruptcy will.
Whatever you decide, keep in mind that life after bankruptcy or debt settlement could be rough because you’ll have a low credit score. However, credit repair is possible within a few years. With stamina and effective planning to improve your credit score you could be in pretty good shape in two to three years.
Can a credit lawyer really fix bad credit? See what this credit repair company did for my credit score.
The Debt Settlement Bible’s debt settlement program works by teaching consumers how to do their own debt negotiation. With The Debt Settlement Bible, you can eradicate your debt through the debt settlement process and save thousands in debt settlement fees by negotiating doing your own debt….
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