There is no doubt that anyone who is seriously in debt would prefer to avoid bankruptcy, however, most people are currently experiencing huge financial burdens. Sadly, many believe that the only way they can escape their debt crisis is by filing for bankruptcy. But there is an effective bankruptcy option – opting for a debt settlement plan. If you have experienced a financial problem, have a huge debt load and you are about to file for bankruptcy, you should consider going for a debt settlement plan. But why is this debt elimination plan better than bankruptcy?
Bankruptcy is Not Your Best Option
Filing for a bankruptcy is a very serious matter. Even though you are utilizing the court to tactically eliminate your debt, you will also be incurring many new costs. In this expensive move, you will have attorney fees, court fees as well as several other unknown expenses to settle.
Once you file for a bankruptcy, you will no longer be held responsible for your whole debt. Even so, you still have to pay back a part of the debts you owe, within a specified period of time. If you miss any payment as ordered by the court, there is a high possibility that your court case will be dismissed. Lastly, the stain of filling for a bankruptcy will stay on your credit account for many years, a stigma which can make it extremely hard to get future credit or loans. The loans you will be able to get will either incur a large interest rate and additional fees, or will require caveat financial security, which in both cases carry great risks. Therefore, the long term consequences of bankruptcy can have serious effects on your finances.
Debt Settlement is a Better Alternative
Compared to filling for a bankruptcy, debt settlement either through brokers, debt settlers, or directly borrowing short term loans from creditors offer all the benefits of bankruptcy without all of the consequences mentioned above. This method of debt elimination can decrease your debt balances considerably. Additionally, you will be given the opportunity to clear off your debt conveniently at a pace that is suitable for you. If you run into any hitches while repaying your debt, you can alter your repayment plan to suit your new circumstance. Another major advantage offered by a debt settlement plan is that an expert negotiator bargains on your behalf with your creditors. This way, you do not have to deal with aggressive debt collectors employed by your creditors.
Debt Settlement Has No Long Term Negative Effect on Your credit Score
With a debt settlement plan, you do not have to file for bankruptcy. It also helps eliminate your debt at a greatly decreased, lump sum payment. Just like in bankruptcy, it helps you meet your financial duties at a largely reduced settlement amount. In addition, debt settlement plan does not have a long term negative effect on your credit rating, unlike bankruptcy. As soon as your creditors receive the lump settlement amount, they will report your debt as “paid in full”, “settled” or settled for lower than full amount. Even though this might have some negative effect on your credit rating, the fact that you have actually repaid a debt in full is an important credit scoring factor.