Debt Settlement and Bankruptcy - Which One Should You Choose?

Many critics sneer at the fact that the bankruptcy offers the same level of financial protection that debt settlement offers. Both have a negative impact on the credit score and both help the individual overcome their debt problem a lot faster. The only difference is that bankruptcy involves liquidation of assets while debt settlement involves a waiver and prompt repayment of the balance amount.

Well, if the two concepts are compared in such a literal sense, there's no doubt that both are debt relief options. However, as one of America's most favorite President said, there's a difference in the security offered by a grave and security offered by peace. In case of bankruptcy, you will enjoy the security of the grave. It is security nevertheless. However, you will find it impossible to lead a respectable financial life after that.

It will become public knowledge that you opted for bankruptcy. You will be publicly ridiculed for having failed to keep your debts under control. On the other hand, debt settlement is a completely different thing. You receive a boost from your lender in the form of 50% to 70% waiver. Even more importantly, you are offered 24 to 36 months within which you have the opportunity of repaying the balance amount in full.

Your credit score will come down. However, prompt repayment of the balance amount will itself indicate that you have controlled the finances. Do you really think that your credit score will be negative even if you make regular repayment of a debt for two years at a stretch? Just because you have a settlement does not mean that all lenders will lose their common sense.

They will quickly identify that you have successfully overcome the problem and have shown discipline for the past 12 to 24 months. Remember that lenders are in the business of assessing risk. There's no such thing as zero risk. You just have to convince your future lenders that you pose a low risk. If that is done, you can be rest assured that you will get loans despite having a poor credit score due to settlement.

Hence, do not to worry too much about the risk of settlement. The only point you should take care of is to avoid dealing with fraudulent companies. Choose the right resources like the debt relief networks online and even this debt risk will come down to zero.

If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called "Free Debt Relief Networks" that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below: