Debt Settlement Vs Bankruptcy - How New Federal Laws Favor Debt Settlement


These days, coming out from the pool of liabilities are the prime concern of every person. The fresh hit of inflation has really disturbed the financial cycle of the economy as well as individuals. People are suffering from huge burden of bad debts and due to bad economic conditions; they are really facing many problems and difficulties in returning the amount to their lenders. In order to overcome the problem of unsecured liabilities, two options are available in market. These options are bankruptcy and debt settlement. Both these options have their own advantages and disadvantages. The following article will help people in understanding the pros and cons of each method in detail.

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Bankruptcy and debt settlement both are the legal options for the elimination of unsecured debts. The process of bankruptcy is considered lengthy and complicated while on the other hand, the procedure of debt settlement is not complicated and lengthy and it also does not require too much paper work and other official documentations. The method of bankruptcy is expensive as the legal attorneys charge high number of fees against their services. In debt settlement, the negotiation firms charge minimum and affordable amount of fees from their customers. Bankruptcy brings negative impact on the credit report of a person and due to this; a person gets ineligible of taking or borrowing loans from banks and financial institutions for the next several years. Debt settlement also brings negative attitude to the credit score of a person but this is only for short period of time and once the person pays back all the liabilities, the negative impact will move away. In bankruptcy, the lenders are not able to recover their money from the borrower. But no such obligations are present in the settlement deal and a person easily gets the money back. The new laws of bankruptcy have made this process more complicated and difficult. Whereas, the new changes in the laws of settlement by the federal trade commission has made this process more genuine and reliable.

By reviewing the above article, one can easily judge that debt settlement is more viable option rather than bankruptcy.


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