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Debt Relief

Understanding the Advantages of Debt Settlement Over Bakruptcy

Often times, consumers who are delinquent in repayment of their debts seek the advice of a debt relief professional in order to find out if debt settlement would be a better option than bankruptcy. The common question that comes up in relation to debt settlement is should credit card debt in my 401(k) able to be settled via a debt settlement program. The answer to this question is yes it can be. It depends on the amount of debt and the amount of outstanding debt.

 

For a consumer who has more than ten thousand dollars in unsecured debt and an annual income of less than twenty-five thousand dollars, the odds of qualifying for a debt settlement program would be good. The reason behind this low income bracket is that they are considered unqualified for the debt relief offered by debt settlement companies because of their bad credit history. The good news for these consumers is that there are debt settlement companies which are willing to take on even large amounts of unsecured debt. In fact, many of them have portfolios with a diversified mix of secured and unsecured debt.

 

Debt settlement companies provide debtors with a negotiation process through which they try to reduce the creditors’ rates of interests and the monthly payments that are due. A debtor approaches a settlement company, explains his or her financial situation and asks for help in negotiating with the creditor. The settlement company’s representatives to go over all the options with the debtor in order to come up with a suitable deal.

 

If the debtor decides to go for bankruptcy instead of settling the debt, his or her credit score would suffer for at least seven years. Once the debtor files for bankruptcy, his or her creditors cannot ask for any repayment from him or her. This means that they have no way of collecting any monies from the bankrupt. On the other hand, if the debtor manages to repay the creditors after filing for bankruptcy, he or she will be able to find decent jobs and can regain the lost credibility that he or she had lost after filing for bankruptcy.

 

In fact, a debtor can opt for early debt relief if he or she is facing problems with meeting the payment for unsecured debt and other debts like credit cards. However, if such an action leads to late payments on secured debt, the creditor may decide to file a case of bankruptcy against the debtor. This is one of the major disadvantages associated with debt settlement. Early debt relief may also lead to an increase in the interest rates of the debt. Hence, it is important that the debtor makes a wise decision regarding the debt settlement expert in Louisianapayment of late fees or penalties.

 

Another important drawback of settlement of debts is the fact that the consumer does not pay any of the debt amount to the creditor. According to a debt settlement expert in Louisiana, a creditor agrees to accept the settlement if he or she is able to recover at least some of the money that is owed by the consumer. Hence, there are many people who are unaware about the negative impact that filing for bankruptcy has in future. The government has introduced several debt settlement programs that help the defaulters to come out of the burden of debts by paying a smaller amount to the creditor. It has also been noticed that a number of people have increased their savings due to the availability of debt settlement programs.

Debt Relief

Bankruptcy Or Debt Settlement? What Will Really Help You Find Peace of Mind?

Debt settlement is often used when someone is dealing with overwhelming debt. It has been an option for years and is still a popular option. Debt settlement is the process of negotiating reduced amounts of debt with your lender. The debt is settled, but not the account is closed. This is one of the most important debt relief options.

Debt settlement is often a negotiated settlement with your unsecured lender. Commonly, lenders will agree to settle for a large portion of the outstanding debt: maybe around 50%, though favorable results can still vary widely. When settlements are finalized, both parties are put in writing into a contract. Your debt settlement service will handle the legal issues for you.

Your lender may not agree to settle for such a large amount, or may take a long time to do so. If this is the case, your settlement provider may make payments to your outstanding debt in increments. Your debt relief expert may also work to make payments to your creditors on your behalf. If you have other assets such as stocks or bonds, you may receive payments from your settlement provider in a lump sum. All debt settlement services are expected to abide by the laws governing debt settlement negotiations.

When debt settlement is being handled by a third party, it is still important to follow through with payments to your creditors on an ongoing basis. You will want to make all of your monthly payments on time and never miss them. If you miss a payment, contact your creditor immediately. Some debt settlement companies will not pursue a debt settlement until you have made all of your monthly payments on time – in some cases they may even give you some extra time without any charges.

As you work with your debt settlement company, it is critical that you remain proactive in making payments to your creditors. If you stop making payments, your creditor can file legal action against you. By paying off your outstanding balance, your debt settlement company can then begin negotiations with your creditors to agree upon a lower interest rate and a payment plan that will hopefully benefit you.

Many individuals use their credit cards to purchase consumer goods. For this reason, debt settlement can be used to reduce the amount of debt on your credit cards. In most cases, debt settlement is less expensive than filing chapter seven bankruptcy. Once you have paid off your outstanding debt, you will need to keep up with the payments to avoid incurring additional debt. However, if you follow the guidelines set forth in your credit card debt settlement agreement, you should find that it is more affordable than bankruptcy.