Debt Settlement Vs Bankruptcy - Which One is a Better Financial Decision?
With the economy in a recession and credit debt on the rise, many borrowers are faced with being unable to keep up with their payments.
When it comes to finding a solution many wonder have a choice of debt settlement vs.
bankruptcy.
How do you know which one is the better financial decision? Consider the advantages of each to see which is the best financial decision for your unique situation.
For a consumer the two most common forms of bankruptcy are Chapter 7 and 13.
Chapter 7 allows for better results that offers steep debt reductions or complete dismissal of debt.
However, after the change in the bankruptcy code in 2005 an individual can no longer choose which bankruptcy option they want.
Rather the court gets to decide which bankruptcy option will be applied.
In order to make a decision the court will evaluate the filer's income and expenses before setting this against debt redemption standards by the IRS.
If the borrower is short on the income guidelines then they can file for Chapter 7 bankruptcy.
However, Chapter 7 has very stringent requirements.
If the test determines that a borrower can pay just a hundred dollars per month towards their debt then the court will automatically choose a Chapter 13 bankruptcy.
No matter which situation you find yourself in the borrower will still need to have credit counseling and a budget analysis done, both of which you have to pay for yourself.
Debt settlement is a negotiation process that provides many benefits and is considered a better option than counseling, consolidation and bankruptcy.
The most immediate benefit you will notice is completely reduce your debt by at least fifty percent and having only one payment to make.
Debt settlement can be used for credit cards, department store cards, unpaid utilities, medical bills and other unsecured debt.
In addition, debt settlement offers the benefits of avoiding wage garnishments, large balance reduction, better security for secured assets, a complete payoff of debt and a faster improvement of credit scores.
When it comes to finding a solution many wonder have a choice of debt settlement vs.
bankruptcy.
How do you know which one is the better financial decision? Consider the advantages of each to see which is the best financial decision for your unique situation.
For a consumer the two most common forms of bankruptcy are Chapter 7 and 13.
Chapter 7 allows for better results that offers steep debt reductions or complete dismissal of debt.
However, after the change in the bankruptcy code in 2005 an individual can no longer choose which bankruptcy option they want.
Rather the court gets to decide which bankruptcy option will be applied.
In order to make a decision the court will evaluate the filer's income and expenses before setting this against debt redemption standards by the IRS.
If the borrower is short on the income guidelines then they can file for Chapter 7 bankruptcy.
However, Chapter 7 has very stringent requirements.
If the test determines that a borrower can pay just a hundred dollars per month towards their debt then the court will automatically choose a Chapter 13 bankruptcy.
No matter which situation you find yourself in the borrower will still need to have credit counseling and a budget analysis done, both of which you have to pay for yourself.
Debt settlement is a negotiation process that provides many benefits and is considered a better option than counseling, consolidation and bankruptcy.
The most immediate benefit you will notice is completely reduce your debt by at least fifty percent and having only one payment to make.
Debt settlement can be used for credit cards, department store cards, unpaid utilities, medical bills and other unsecured debt.
In addition, debt settlement offers the benefits of avoiding wage garnishments, large balance reduction, better security for secured assets, a complete payoff of debt and a faster improvement of credit scores.