Bankruptcy - A Regressive and Negative Solution to Urgent Debt Problems
Critics of debt settlement point that bankruptcy is a much better option.
If that were to be the case, why are debt problems still around? People have been declaring bankruptcy and seeking protection from their creditors since ancient times.
If bankruptcy is very effective, then why is it that people are still opting for this drastic financial solution? Bankruptcy is a solution for debt problems in the same way in death is a solution for the problems of life.
On the face of it, this may seem like a very ideal solution.
However, you realize that bankruptcy never tries to solve the root cause of the problem.
It simply provides an opportunity for the borrower to move on and for the lender to cut losses.
However, bankruptcy is not the right solution if you want to find out why such a problem arose and how one can avoid it again.
Threatening a person with 10 years of poor credit score is not going to work.
We do not think more than a month ahead as far as our finances are concerned.
In such a scenario, asking a person to think 10 years ahead is next to impossible.
Debt settlement is a much better option because it distributes responsibility between the lenders and the borrowers.
The lender is compelled to give up a significant portion of the profit and the borrower is required to repay the balance amount in a disciplined manner.
At the end of the day, the loss suffered by the lender may be slightly less than that suffered in case of bankruptcy.
However, the commercial relationship between the borrower and the lender continue and the parties can continue earning money using their commercial transactions.
Hence, if you are contemplating bankruptcy because of your drastic financial condition, you should think of debt settlement instead.
As far as the benefits and disadvantages are concerned, there are many points in favor of settlement as well as in favor of bankruptcy.
The only point that clinches the deal is that bankruptcy is a regressive and negative option while settlement is a positive option that will push you towards repairing your credit score and improving the discipline.
Considering the recessionary times in which we live in today, a settlement offers a lot better scope for the economy and the nation as compared to bankruptcy.
This is the reason why the government offered the stimulus package to the lenders so that instances of debt settlement for the ordinary borrowers may increase.
If that were to be the case, why are debt problems still around? People have been declaring bankruptcy and seeking protection from their creditors since ancient times.
If bankruptcy is very effective, then why is it that people are still opting for this drastic financial solution? Bankruptcy is a solution for debt problems in the same way in death is a solution for the problems of life.
On the face of it, this may seem like a very ideal solution.
However, you realize that bankruptcy never tries to solve the root cause of the problem.
It simply provides an opportunity for the borrower to move on and for the lender to cut losses.
However, bankruptcy is not the right solution if you want to find out why such a problem arose and how one can avoid it again.
Threatening a person with 10 years of poor credit score is not going to work.
We do not think more than a month ahead as far as our finances are concerned.
In such a scenario, asking a person to think 10 years ahead is next to impossible.
Debt settlement is a much better option because it distributes responsibility between the lenders and the borrowers.
The lender is compelled to give up a significant portion of the profit and the borrower is required to repay the balance amount in a disciplined manner.
At the end of the day, the loss suffered by the lender may be slightly less than that suffered in case of bankruptcy.
However, the commercial relationship between the borrower and the lender continue and the parties can continue earning money using their commercial transactions.
Hence, if you are contemplating bankruptcy because of your drastic financial condition, you should think of debt settlement instead.
As far as the benefits and disadvantages are concerned, there are many points in favor of settlement as well as in favor of bankruptcy.
The only point that clinches the deal is that bankruptcy is a regressive and negative option while settlement is a positive option that will push you towards repairing your credit score and improving the discipline.
Considering the recessionary times in which we live in today, a settlement offers a lot better scope for the economy and the nation as compared to bankruptcy.
This is the reason why the government offered the stimulus package to the lenders so that instances of debt settlement for the ordinary borrowers may increase.