What You Need To Know About Debt Settlement And Bankruptcy
Posted on September 30th, 2009 by admin
When it comes to getting out of credit card debt, using debt settlement is one of your best choices. Bankruptcy is still an option but not everyone qualifies for Chapter 7 which liquidates your debt entirely. The new laws made the requirements for Chapter 7 much harder to reach. A lesser of two evils is to use debt settlement over bankruptcy to get out of debt. In the short article, I will give you some credit card debt settlement advice to help you learn more about it and understand why you should use it instead of filing bankruptcy or using debt consolidation or other debt elimination methods.
So what exactly is debt settlement? In simple terms, debt settlement allows you to negotiate with your creditors and zero out your entire balance with one or two partial payments that amount to a fraction of the total outstanding balance. They would rather settle your debt for a percentage of what you owe right now than to go through a bankruptcy and wait some more years to get paid through the bankruptcy court.
On average you can save 50% of what you owe to your creditors. This would be equivalent to cutting your credit card monthly payments in half. When you go through this, it’s easy to get out of credit card debt fast. That’s what makes this one of the most powerful debt elimination methods you can use.
You do not worry about the interest rates or lowering your interest rates because when you are several months behind on your credit cards you will get the default rates of 25 to 30% or more.
I would not be taking a look at my credit score when using debt settlement, or bankruptcy for that matter, it’s going to be bad. Bankruptcy and debt settlement will both have detrimental effects on your credit score however, debt settlement is easier to recover from. Your bankruptcy filing information will be available in the public through the courthouse or online databases. Debt settlement will still adversely affect your credit score just like bankruptcy. Your credit will be much easier to rebuild once you have no debt on the books.