The credit card debt problem is still considered as a big problem in the country. Debtors are running to different debt relief agencies to overcome this problem. There are many types of debt relief options such as self-repayment option, debt management, debt settlement, debt consolidation, and bankruptcy. But you should opt for the best option to get out of debt. Today I’m going to discuss whether debt settlement is a better option or bankruptcy.
You can settle your debts yourself. However, in case of huge debts, you should take the help of a debt settlement company. The company will negotiate with the creditors on your behalf. In the negotiation process, if the creditors agree to settle your debt, then they’ll reduce the outstanding debts.
If you want to settle your debts yourself, then you need to negotiate with the creditors. You should discuss your financial hardships with the creditors. You’ll have to show the detail record of your income and expenditures to them. Remember, the creditors may not agree to settle your debts. To convince your creditor for the agreement, you'll have to prove your efficiency towards your personal finance. You shouldn't miss any payment just before settling your debts.
If you get help from a settlement company, it will arrange a counseling session for you on debt and money management. . Gradually, they’ll start the negotiation process with the creditors.
According to the financial experts, a debtor’s last option will be bankruptcy. Remember, filing bankruptcy helps you to get a discharge from all or some of your debts, but it hurts your credit score. , . Thus, you’ll not get collection calls, no creditor can sue you, no lender can foreclose your house.
There are various chapters of bankruptcy, but your situation will depend on which you may be able to file.
If you file chapter 7 bankruptcy, then the bankruptcy trustee will sell off your assets to pay your creditors.
If you file chapter 13 bankruptcy, then the bankruptcy court will set up a repayment plan for you to pay your creditors according to the repayment plan.
Bankruptcy hits your credit score by many points. So, people believe that debt settlement is a much better option than bankruptcy. Yet . Such as:
Remember, each case will be different from each other. So, you should have a talk with a financial expert before making a plan. Above all, both the cases will depend on various factors such as the person’s income, the debt situation, and the credit rating. You need to .