The thought of bankruptcy is a scary one for most people.
But the fact is that in the current market recession many people are being forced into bankruptcy.
A bankruptcy stays on the credit records for ten years and on the public record forever.
The credit scores of a bankrupt individual are ruined almost irreparably.
Once an individual files for bankruptcy, he or she cannot get credit in the market anymore.
Buying necessities like health insurance becomes difficult and much more expensive.
In fact, even getting utility services becomes a difficult task.
However, most debtors can avoid bankruptcy.
Debt relief is available to debtors in the form of debt settlement.
Debtors who have a debt of $10,000 or more are eligible for debt settlement programs.
Under these programs the debtors can negotiate the debt amount with the creditors.
If the negotiations are handled properly, the debt amount can be reduced by almost 50%.
Debt settlement is definitely a better option to bankruptcy.
This is because although by opting for settlement a debtor's credit scores will take a hit, the damage will not be irreparable.
In fact, with proper financial management and better spending habits, the credit scores can be rebuilt within 3-4 years.
If a debtor chooses to pay the negotiated amount as a lump sum, he or she does not have to pay any more interest.
On the other hand if he or she chooses to pay the amount in installments the rates of interest can be negotiated and lowered.
Usually the equated monthly installments are calculated in such a way that the debtor can repay the entire negotiated amount in not more than 48 months and become completely debt free.
Those debtors who do not qualify for debt settlement can opt for debt consolidation wherein several high interest credit card loans are paid off with a single low interest one.
Another option would be to convert high interest unsecured debts into low interest secured ones.
All these procedures are completely legal as the creditors agree to ignore the agreement made at the time of giving the loan and enter a new one with the debtor.
But the fact is that in the current market recession many people are being forced into bankruptcy.
A bankruptcy stays on the credit records for ten years and on the public record forever.
The credit scores of a bankrupt individual are ruined almost irreparably.
Once an individual files for bankruptcy, he or she cannot get credit in the market anymore.
Buying necessities like health insurance becomes difficult and much more expensive.
In fact, even getting utility services becomes a difficult task.
However, most debtors can avoid bankruptcy.
Debt relief is available to debtors in the form of debt settlement.
Debtors who have a debt of $10,000 or more are eligible for debt settlement programs.
Under these programs the debtors can negotiate the debt amount with the creditors.
If the negotiations are handled properly, the debt amount can be reduced by almost 50%.
Debt settlement is definitely a better option to bankruptcy.
This is because although by opting for settlement a debtor's credit scores will take a hit, the damage will not be irreparable.
In fact, with proper financial management and better spending habits, the credit scores can be rebuilt within 3-4 years.
If a debtor chooses to pay the negotiated amount as a lump sum, he or she does not have to pay any more interest.
On the other hand if he or she chooses to pay the amount in installments the rates of interest can be negotiated and lowered.
Usually the equated monthly installments are calculated in such a way that the debtor can repay the entire negotiated amount in not more than 48 months and become completely debt free.
Those debtors who do not qualify for debt settlement can opt for debt consolidation wherein several high interest credit card loans are paid off with a single low interest one.
Another option would be to convert high interest unsecured debts into low interest secured ones.
All these procedures are completely legal as the creditors agree to ignore the agreement made at the time of giving the loan and enter a new one with the debtor.