Which Is The Better Option – Filing Bankruptcy Or Debt Settlement?

You cannot drive in your automobile and turn on the radio without listening to adverts for debt settlement. Many of these businesses attempt to sell the concept that debt settlement is a better option than bankruptcy. Most of their claims say that debt settlement will not harm your credit like a bankruptcy filing will. People that are currently going through substantial financial issues should be extremely wary of the businesses that make too good to be true claims. After checking out some blogs online there appeared to be, a significant stigma attached to the debt consolidation businesses. It appears that numerous individuals have not received what they were promised.

Debt settlement businesses state that they are a substitute for filing bankruptcy, and can provide the same outcome. After looking into it a bit, there have been numerous complaints against these businesses. One complaint noted that the customer had agreed with the debt elimination business to rid of all his credit card debt. The person stated that he paid the business a few thousand dollars in advance to begin dealing with the creditors. After enrolling, the person was served with documents to be sued by one of the creditors. The person called the debt settlement business and was reassured that they would handle the situation and not to be concerned. After a month the debtor discovered that, the creditor won a judgment against him and was now able to garnish his income. After this occurred, the debt settlement business would not call him back since they could not do anything about the situation.

After talking to a bankruptcy lawyer, it appears that this is more common practice than most individuals know. For this example, there is no comparison between bankruptcy and debt settlement. First off, the cash the customer gave to the debt elimination business would have covered the costs for a bankruptcy lawyer and the filing fees. Secondly, filing bankruptcy will commence the automatic stay and that will cease the collection proceedings against the debtor. Therefore, in the example above, the creditor would not have been able to win judgment against the debtor. Last of all, even if the lawsuit has been filed against the debtor before the bankruptcy was filed, bankruptcy would put a halt to the salary garnishment and any additional collection attempts by the creditor.

In regards to getting rid of debt, bankruptcy is a sound option. There is a bankruptcy chapter to fit every debtor’s needs depending on their personal circumstance. Chapter 7 bankruptcy is mostly suitable for debtor that is eligible for the means test and has a significant rate of unsecured debt. Chapter 13 bankruptcy is suitable for person that wants to halt foreclosure on their family residence. Chapter 13 will enable the debtor to manage the back payments and keep their residence. When making the decision to file bankruptcy going to see your nearest bankruptcy lawyer will be a good beginning. Discussing and going over your personal situation can be very informative. Do not go for anything until you have gone over all of your options.