What Are the Benefits of Debt Settlement?

When deciding whether to use debt settlement or filing bankruptcy to eliminate your debt, there are a few factors that one should consider. The information one should think about before making the final decision is based on the amount of debt that one carries. If an individual has $50,000 in credit card debt, filing for bankruptcy would be a better option because most debt settlement companies settle the debt and about 50% of the balance. So unless the individual has $25,000 laying around or come up with large chunks of cash to pay the company, filing bankruptcy would be a better option for this individual. For the person who has one or two accounts in default, debt settlement might be the solution that would work in their best interest. Considering filing Chapter 7 bankruptcy will stay on one’s credit record for 10 years, it would be foolish to use bankruptcy as a form of debt elimination when the debt is so small. As a rule of thumb debt settlement works best for individuals that are employed and have debt under $10,000. Depending on the individual’s ability to come up with 50%, some on the higher end will opt out of debt settlement and file for bankruptcy.

One other benefit of debt settlement over a bankruptcy filing is the bankruptcy not being on your record. Today, many employers do a credit check on potential employees and in some cases if the job works with money the person who has the bankruptcy filing on their credit report might not get the job over another potential employee. There are antidiscrimination laws that protect people after filing for bankruptcy, but it would be hard to prove the reason why an employer chose one employee over another.

Debt settlement is great for an individual that has a small amount of debt that they can’t afford to pay. Basically, the interest alone stops them from ever getting any headway on paying down the balance. When the account goes into default, and filing bankruptcy is not an option, a debt settlement will give the debtor a solution to reduce the balance and resolve the debt.

Getting answers to those tough bankruptcy questions needs to be thought of before you make a decision when it comes to your financial problems. Finding the answers to help you understand your situation more clearly can help you make an informed decision about filing bankruptcy. Take a minute to call or fill out the form to have a FREE NO OBLIGATION CONSULTATION with a bankruptcy attorney in your area.