Debt Settlement or Bankruptcy – What's the Best Option to Quickly Eliminate Unsecured Debt?

In today’s financially difficult times, consumer debt is very high. A lot of Americans are struggling with debt and a record number of debtors are filing for bankruptcy. Your financial situation may be as a result of illness, divorce, unemployment or overspending, it is usually very overwhelming. If you are under heavy debt, you should try debt settlement before you start contemplating bankruptcy. It is true that if you file bankruptcy you can get rid of the responsibility to repay any kind of unsecured debt. However a bankruptcy stays on the credit report for 10 years and on the public record forever. A bankruptcy can ruin you socially and financially. A bankruptcy can hinder your possibilities of getting a job, credit, insurance and even a place to live. It is important to understand all the implications before taking such a critical decision.

On the other hand if your put in some effort and proper planning you can become free of debt in a reasonable period of time with the help of settlement programs. Under a settlement program you can either negotiate the debt with the creditors on your own or hire a debt settlement company. If you hire a debt settlement company you will never have to deal with the creditors at all because even your collection calls will be redirected to the office of the debt settlement company. The debt settlement company will negotiate the loan amounts with the various creditors. The creditors will assess the debtor’s actual paying capacity and decide on a settlement amount. This settlement amount can then be paid off as a lump sum or in equated monthly installments.

The creditors can also be persuaded to reduce the rate of interest on the settlement amount payable. They usually also waive of the penalty charges like non payment and late payment penalties. This procedure reduces the unsecured loans by almost 40% to 60%. You can become loan free in approximately 48 months. A settlement does affect your credit ratings but these can be rebuilt with the help of healthy spending habits and proper financial planning. IT usually takes about 2-3 years to rebuild your credit ratings after a settlement.

If you are struggling with paying back your credit card debt or any other unsecured debts there is legitimate help out there. Debt settlement usually makes financial sense for consumers with over $10k in unsecured debt. There are also other options available. To talk with a debt relief counselor for free help check out the following link:

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