There are numerous debt solutions today for consumers that are experiencing a financial hardship. Due to the current economy many households who had been paying their consumer debt on a timely basis, now find themselves in a financial bind due to a cut back in hours, or a layoff of a spouse. Of course there are other scenarios that can result in a financial hardship, an illness for one. It is always wise for people in this position to sit back and weigh their options to ensure they are making the proper decision. The two most utilized options for dealing with a financial hardship is bankruptcy and debt settlement. When referring to debt settlement, we will assume that the reference is regarding the attorney based model; which has been found to be the most reputable form of debt solutions.
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If you find yourself in a situation like this do not feel depressed or guilty about things. My suggestion is to take a step back and look at the world around you. There are millions of people throughout the country who are facing the same problem due to businesses closing, moving out of the country or downsizing. So it makes the most sense to look at your options for gaining control of a situation that can easily get out of control, fast. The choices available today are:
Debt consolidation loan
Consumer Credit Counseling
Bankruptcy
Debt settlement
The focus of our discussion here will focus on the two options that deal specifically with people who are experiencing a financial hardship, debt settlement and bankruptcy. The goal is to look at these two options by offering a concise comparison, enabling the consumer to come to a better understanding of the options that are available to them and the issues that are associated with each.
Suitability:
Bankruptcy, is legal based and is carried out by an attorney who is under the supervision of the court. This option should be entered into only when there is nothing left to do. In other words, it is the last resort. In contrast, debt settlement is an option that can be accessed at any time as long as there is a financial hardship and the person has the ability to stick to the savings plan that has been approved for them.
Credit Score:
Filing for bankruptcy is a drastic move that will ruin your credit standing for as long as 7-10 years. Your ability to obtain any future credit from a financial institution will be hampered until much time has gone by and you have slowly re-established a credit history. With debt settlement your credit will also be hit hard, but the re-building process for your credit will happen quicker. There are options out there today that can help speed up the process, secured credit cards for one. This is where you open an account with Visa or MasterCard and use your own money to re-establish your credit.
Application process:
Filing for bankruptcy is a timely process that includes meetings with a lawyer, gathering financial information and evaluating personal property for possible liquidation. The laws and processes vary State to State, but one thing is certain, you will have to stand before a court to gain the approval. In the case of debt settlement the process is less time consuming. You should go through an enrollment process where a detailed financial analysis is done to determine whether or not entering the program is right for you. Once this is done an attorney should sign off on your case accepting you into the program. If this is not the method used, the program is not attorney based and you should look elsewhere for help.
Assets and Personal Property:
In the case of a bankruptcy your assets and personal property can be attaches and there is a strong possibility of losing them. In contrast, debt settlement does not have any effect on your property and assets and you can retain them.
In conclusion, debt settlement is clearly the most logical step for most people who are enduring a financial hardship. Collection agencies are agreeing to beneficial settlements due to the enormous amounts of consumer debt. It is important to compare debt settlement companies, look for an attorney based program where they have a vested interest in your success. In other words, they spread there legal fee out over a 15-24 month period to ensure you are building your savings account from month one. The non attorney based programs front load their fees, you pay the fee off first, over a 4-8 month period. By collecting there fees up front they have little concern as to whether or not you stick with the program.
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