How does debt settlement compare to bankruptcy?
Filing for bankruptcy has many negative implications, and is usually considered only as a last resort. Bankruptcy may seem to be the quickest solution to removing your outstanding debt but even bankruptcy attorneys will tell you it will remain on your credit for 10 years. Both Chapter 7 and Chapter 13 will represent a major negative mark on your credit rating. In Chapter 7 bankruptcy it will stay on your report for 10 years and chapter 13 bankruptcy stays on your report during the time you are in the bankruptcy program plus a specified time calculated from the date you complete the program. • Bankruptcy can cost up to $2,500 to file plus additional attorney’s fees. Additionally in Chapter 13 there is a 5% trustee fee for the administration of your chapter 13 bankruptcy. • Chapter 13 bankruptcy the court decides what you can pay and what your budget is. • Bankruptcy may affect your ability to get a job if you work in security or financial services or have duties involving financial info
A. A Chapter 7 Bankruptcy would eliminate most of your debt with no repayment. However, it is more difficult to qualify for a Chapter 7 under the new Bankruptcy laws. The odds are that if you can afford to pay back a significant portion of your debts, you would not be allowed to file a Chapter 7. Under a Chapter 13, you would pay off all or a portion of your debts over a three to five year period. The disadvantage with a Chapter 13 is that you must pay the amount that the Bankruptcy Court orders you to pay, rather than the amount you want to pay. Generally, Bankruptcy was considered to be your last resort, after all other solutions have been explored. Bankruptcy can have a devastating effect on your credit rating that can last for ten years. Debt settlement is a bankruptcy prevention program that provides you with financial freedom without the long-term effects that come with bankruptcy.
