Debt Settlements Vs Bankruptcy - Which Debt Elimination Technique is Better?

Debt settlement vs. bankruptcy - this thought is sure to have crossed the minds of several Americans. It is common knowledge that a significant portion of the populace is in debt - be it in student loans, mortgages, credit card debt, or whatnot. And everyone knows that paying off debt can be very difficult, especially in these troubling times. Sadly, some of these individuals are becoming quite desperate, what with people being reduced to living from paycheck to paycheck and barely making the minimum payments to their creditors. The situation does seem bleak but there are, however, alternatives to filing for bankruptcy - debt relief and settlements. So, in the battle of debt settlements vs. bankruptcy, which is the best bet for freedom from debt?

Before going into the pros and cons of both, it is important to know that both debt settlements and filing for bankruptcy will reflect badly on your credit rating. And this kind of damage will stay for several years, for example, bankruptcy or undergoing settlement will hurt your chances in filing for loans or purchasing a house. This situation is not all bad though as creditors are aware that once your bankruptcy ends, it will take many years before you can file for bankruptcy again, so most will be willing to extend you credit, albeit at a higher rate.

Now, let's see how to tackle between debt settlements and bankruptcy. There are several points for consideration for both forms of debt elimination strategies. Here are some of them:

Debt Settlement:

• It is one of the best known alternatives to filing for bankruptcy.

• It allows you to reduce your debt and allows you to pay off the remaining balance at a lower interest rate.

• Debt settlement requires a rather large amount of cash. If you successfully negotiate a settlement with your creditors, you will have to pay a lump sum directly to your creditor or to the creditor's representative.

• Having multiple accounts may prove difficult as managing simultaneous negotiations can be tedious.

• Not all creditors are willing to negotiate. Some may offer a non negotiable rate of reduction of about 10%.

• Debt settlements will work best for a delinquent account.

• There are a lot of illegal debt settlement companies waiting to pounce on any available prey.

Bankruptcy:

• Bankruptcy frees a debtor from his debt but will have a largely negative effect on the debtor's credit rating.

• Restrictions will be imposed on your finances if you file for bankruptcy. After declaring bankruptcy, all your personal assets will be taken by the trustee, after which your debt will be cleared once all assets are sold.

• You will be subjected to very limited credit. If you have declared bankruptcy, you will require the permission of the court prior to starting a business venture. Traditional credit sources will no longer be available.

So, which is better? Well, as a general rule, bankruptcy should always be your last resort. You should exhaust all available options before even considering bankruptcy.

If you want to get out of debt and hire a debt settlement company for debt negotiation then I have an important piece of advice. Do Not go directly to a particular debt settlement company but rather first go to a debt relief network who is affiliated with several legitimate debt companies. In order to be in the debt relief network, the debt settlement companies must prove a track record of successfully negotiating and eliminating debt. They must also pass an ethical standards test. Going through a debt relief network will ensure that the debt company you are provided with is a legitimate and respected company. This is the most efficient way in finding the best debt settlement companies and increasing your chances of eliminating your debt.

FreeDebtSettlementAdvice.com is one of the largest and most respected debt relief networks on the marketplace today. To find a debt settlement company through FreeDebtSettlementAdvice.com check out the following link: