Debt Settlement or Bankruptcy; That Is The Question!
Debt settlement is the fastest way to experience debt relief and be debt free for the least amount of money while avoiding bankruptcy, and may be best for you if you cannot or do not want to file bankruptcy.
One type of personal bankruptcy is the fastest and cheapest way to find relief and get out of credit card debt that exists, period, while another type of personal bankruptcy may offer debt relief but takes many years, costs even more than debt settlement and seriously damages your credit for well over a decade.
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So which is which??...And which is best for you?
Let's start by clarifying what bankruptcy is, the differences between the two different types of personal bankruptcy filings and what you must whatch out for when considering bankruptcy (especially when speaking with bakruptcy attorney's.
Chapter 7 Bankruptcy is a "liquidation".
This is where you pay an attorney or law firm anywhere from $800 to over $3,000 to file, complete the substantial paperowrk and documentation required and then within a matter of months your debts are completely wiped out.
Chapter 7 Bankruptcy is the fastest way to get out of debt for the least total direct cost.
However, chapter 7 bankruptcy is reported on your credit report (listed with every account included in the bankruptcy) for TEN YEARS.
Chapter 13 Bankruptcy is a "repayment plan".
This is a court-ordered repayment plan, usually lasting 60 months. Any missed payments cause you to lose the protection of the courts and your creditors can then go after you.
Chapter 13 stays on your credit report (listed with every account included in the bankruptcy) for SEVEN YEARS AFTER the date of discharge, which is usually FIVE YEARS after filing, severely damaging your credit for A TOTAL OF TWELVE YEARS. Chapter 13 is also public record for twenty years and carries most of the additional costs mentioned for Chapter 7 above.
Often, my clients tell me their estimates for repayment plans through Chapter 13 would require them to repay a higher percentage of debt over a longer period of time with a monthly higher payment than they could do otherwise through debt settlement.
An "Inside-Joke" of Bankruptcy Attorneys that ISN'T So Funny...
Some Bankruptcy Attorney friends of mine shared a story with me about how a Chapter 13 Bankruptcy is like a "turkey dinner"...
You see, everyone is sitting at the dinner table; the judge, the attorney's, your creditors... Each with a bib on, double-fisted with fork and knife in hand, drooling and licking their chops...
And guess who's the turkey?
In a Chapter 13, YOU are the turkey!
Serious Consequences for ANY Type of Bankruptcy FIling...
Any personaly bankruptcy filing is public record for 20 years. This may have detrimental affects on obtaining financing as well as employment opportunities.
You are usually required to include all unsecured debts in the bankruptcy.
Bankruptcy may have additional costs including limiting your credit worthiness (currently there are no mortgage loans available until 2 years after discharge), increased interest rates and fees, higher deposits required, disqualifying you for certain types of employment and more.
Typically, creditors will see an entry like this below each account on your credit report:THIS ACCOUNT INCLUDED IN CHAPTER 7/13 BANKRUPTCY
There are many reasons to avoid bankruptcy at all costs. Significant social, emotional and psychological risk is also involved in filing bankruptcy. Each of us must decide for ourselves where we stand on these levels.
What To Do If You Don't Qualify For Chapter 7 Bankruptcy?
The short answer is, "Run away from the bankruptcy attorneys BEFORE they talk you into becoming a turkey dinner!"
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) passed in October 2005 made sweeping changes to American bankruptcy laws. Many of the bill's provisions were explicitly designed to make it "more difficult for people to file for bankruptcy", especially Chapter 7.
These new laws have proven to be very "creditor friendly," disqualifying many Americans from filing chapter 7 and leaving them with chapter 13 (being a turkey) as their only option for filing bankruptcy. If you find yourself in this situation, then typically debt settlement is a better option to get out of debt faster, with less credit damage, for a lower cost.
When Is Debt Settlement A Better Choice?
Debt settlement is the fastest way to be debt free for the least amount of money while avoiding bankruptcy. Debt settlement is a moral, legal and ethical option for people with serious debt in financial hardship. It's honorable. It is agreed to by your creditors to "forgive" your debt.
If you do not qualify for chapter 7 or simply to do not want to file bankruptcy for moral, pride or ethical reasons, then debt settlement may be the best choice you can make.
Be very careful when selecting a debt settlement plan or program
What If I Can't Afford Debt Settlement?
If you cannot afford the minimum payments for a debt settlement program, then you should be able to qualify for a chapter 7 bankruptcy. You should seriously reconsider any moral objections against bakruptcy and realize these laws are in place for a reason.
If you qualify, then it may be much better for you and your future to "bite the bullet" now and get out of debt instead of remaining in the financial stress and strain of carrying high amounts of high interest credit card debt working against you night and day.
Do You Need Expert Guidance to Choose between Bankrupcty or Debt Settlement to get Out of Debt, or Help Finding a Trusted & Proven Bankruptcy or Debt Settlement Firm for Debt Relief?
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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