Which is Better? Debt Settlement Or Bankruptcy?

I am not an attorney and the following does not constitute legal advice.

The decision between settling a debt or filing for bankruptcy lies squarely on the outcome and impact it will have on you and your credit history, both now and in the future. If you decide to settle, it is recommended that one engage the services of a professional debt resolution company, since this is what they do. They can use their influence and professional relationship with major creditors to negotiate better terms as well as get you longer repayment schedule. So when trying to determine which is better, debt settlement or bankruptcy, it is equally important to keep in mind that it depends on your unique circumstances.

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Another favorable factor in using a debt settlement company is that they know how to work with your creditor and negotiate a reduced amount that can fit your current financial situation or budget. They can get you an agreement you can work with where you make payments according to a new plan. This prevents your falling back into the situation that caused you to lapse payments in the first place. They are known to negotiate down principal balances owed by as much as 40, 50, and even 65% (percent).

Potential candidates for debt settlement:

1) One who is behind on their monthly payments and owes more than $10,000.
2) One who has the ability to make some sort of monthly payment or can access savings.
3) One who still has assets to fall back on as a financial resource.

Conversely, if bankruptcy option is contemplated, it is crucial to take into account what you want to accomplish both now and in the near future. If you simply want to wipe out your debt and start anew, this may be the best option for you. However, since a bankruptcy record can stay on your consumer credit report for up to 10 years, you may want to reconsider if you are planning on purchasing a big ticket item such as a home or getting a business loan.

The volume of bankruptcy filing have been on the increase in recent years and with the current economic recession, more consumers are opting for this option as a last resort. Many people enjoy the sense of relief that accompanies completely settling all debts once all payments have been made and all guidelines issued by the Bankruptcy Judge or Trustee have been followed.

Potential candidates for bankruptcy:

1) One who owes a lot and has no way of making any type of monthly payment.
2) One who has no money saved and has no disposable income to put towards a debt settlement program.
3) One who has no assets to access as a financial resource.

So the decision to either "settle" or file for "bankruptcy" will rest completely with the individual. The consumer's unique circumstances and their immediate and long term goals will also factor in this final decision. To make the correct decision between these two choices requires a thorough assessment of all pertinent factors that confronts you now and those that will confront you in the immediate future. Whatever final decision you make has to be the one that will offer you the opportunity to be viewed positively as "credit worthy" by future creditors.

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