Why Debt Settlements Are Much More Favorable Than Filing Bankruptcy

Feb. 20, 2010 - PRLog -- Filing bankruptcy is a nightmare no one wants during their life time. We all heard several corporate giants filing for bankruptcy, under massive financial loss. The small scale business and the common mass were not left intact; they too suffered the blow of recession and had huge debt with little or no means to make the payment. Bankruptcy is filed under one of the three main chapters of code, Chapter 7, Chapter 11 or Chapter 13 as per US federal law, for their respective reasons.

The prominent reasons for filing bankruptcy can be inability to pay the debt and be freed of the debt liability. Depending on the code you filed your case; your secured asset might be seized or left with only denial to further loans. Your credit score is however, bound to dip low and you will be denied further request of any form of loan for at least next 10 years. It will affect other aspects of your life as well, like job, credibility etc. This does not have even a single ray of hope. In contrast to this debt settlement is a much favorable situation.

Debt settlement will also affect your credit score, but that is temporary, once you pay off the negotiated amount you can improve on your credit score once again. So, what is debt settlement? It is arbitration or a negotiation of the debt you owe to your creditors. You can either do it on your own or get in touch with a debt settlement company to negotiate on your behalf. The advantages of debt settlement are:

- You pay less than half the amount you owe, e.g.: you pay $4000 for a debt amount of $10000
- You pay the debt in 2-3 years, instead of paying it for around 30-40 years with a minimum amount every month.
- You get a waiver on all financial charges the credit card company adds, the outstanding amount, the late payment, overdue fees, etc.
- You are able to make a single payment instead of making separate payments to each credit card company.
The credit card company agrees for a lower APR for some billing cycles whereby you can pay off the debt.

The credit card companies have been the major beneficiaries of the federal stimulus package and got a chance to restore their position in the market. There is still more to do, they have a chance to recover some more, if they agree to debt settlement. This is also the reason, why the credit card companies are lenient on debt settlement.

If you have over $10,000 in unsecured debt there is legitimate debt relief help available. Creditors of unsecured debt are very concerned about collecting and debt settlement companies know exactly how to eliminate at least 50% of what you actually owe.

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FreeDebtSettlementSolutions is a matchmaker in the debt settlement industry. They have paired up thousands of consumers up with debt settlement companies who are most likely to get consumers the best deal.

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