Debt Settlement Or Bankruptcy – A Financial Comparison

The financial implication of debt settlement as compared with bankruptcy is very different despite the fact that both these solutions are considered debt relief options. Once you get a debt settlement deal finalized, your debts will come down by a fixed percentage as determined between you and your lender.

This means that the total amount owed will come down and only the balance amount needs to be repaid. As far as bankruptcy is concerned, the actual amount that shall be waived off is never fixed. It all depends on the total value of your assets and the value that the court official is in a position to recover by liquidating the same.

The only guarantee that you enjoy is that the debt shall be discharged no matter what the value of the assets are. Another significant difference between settlement and bankruptcy is the impact on your finances. Bankruptcy involves starting from scratch.

If you do not have a job, you will find it difficult to get another job with a bankruptcy in your credit report. On the other hand, a settlement is a very simple process and you just need to continue your existing job.

If you go in for a new job, you need not specify that you have discharged your debts with the help of debt settlement. Mentioning that you have opted for bankruptcy in the past is mandatory as far as the law is concerned. No such compulsion exists as far as settlement is concerned.

As far as financial benefits are concerned, there is no doubt that settlement is much better. This is because you will be permitted to retain your financial life style and you just will be required to repay the balance amount payable after the waiver has been finalized. In case of a bankruptcy, you need to start from scratch.

You will lose control of all your assets apart from the exempt assets. Further, if you are ordered by the court to go in for a Chapter 13 bankruptcy, you will have to spend at least twelve to eighteen months trying to finalize the debt repayment program and spend another three to four years repaying all the debts.

As far as expenses are concerned, you can be certain that the cost of a debt settlement will not exceed fifteen to twenty percent of the total amount owed. On the other hand, the cost of bankruptcy will involve court fees as well as the fees of various bankruptcy professionals that you employ.

If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called “Free Debt Relief Networks” that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below: