Debt Settlement Vs Bankruptcy

Debt Settlement Vs Bankruptcy

Pay Off Your Debts for As Little As 50 Cents on the Dollar!

Wipe Out Your Debt and Improve Your Credit!

You see these ads everywhere, but can you trust them? What aren't they telling you? Is it really as good as it sounds?

In tough economic times, the thought of being debt free is a powerful lure. For most people its a life long ambition. By the time 99% of the population gets out of college they're already tens of thousands of dollars, if not hundreds of thousands of dollars, in debt.
It's true that many lenders are willing to settle for pennies on the dollar.

The idea is that 60% of their money recovered is better than 0%, especially if they can reinvest that money with a lower risk borrower.

Debt settlement companies specialize in working with your lenders to settle those outstanding debts. They work for you, not the lender, but the lender has an incentive to work with them. There are definite advantages to using their service and some serious disadvantages, as well. You need to know the whole story so you can make an educated decision as to whether or not debt settlement is right for you.
How Debt Settlement Works

When you sign up for debt settlement, you must make monthly payments to the service based upon the agreed payment plan. It mostly has to do with the amount of debt you have, your income, and how quickly you want to pay it off. Obviously, the larger the payment, the faster you'll be out of debt.

While you're making these payments, the debt settlement service will contact your lenders and inform them that they, the service, is their new point of contact. They are instructed to refrain from calling you ever again. If you're getting these calls now, you know what a huge weight off your shoulders this one benefit can be.
Here's What They Don't Tell You About Debt Settlement

First, they usually keep the first few payments, or a percentage, thereof. This is how they make their money. Next, they don't actually pay anything. At least not until they have collected their fee and enough money to make a settlement offer. Lenders aren't interested in payment plans if they're going to take a loss. They want a lump sum. In the mean time, your lender is hitting you with fees and penalties and trashing your credit score. They may even be considering suing you in the hopes of getting a judgment against you.

It's a gamble. Pay off your inflated debt at 20%-70% off and walk away debt free or get sued and have a lien placed against your assets (i.e. house, car, bank account, salary, etc.).

I have personally seen a $120,000.00 debt settled for $24,000. I have also seen someone have their car repossessed and wages garnished. The main difference between the two? The person who settled for just 20% of their debt hired a debt settlement service right away. The service opened up communications with his lenders, which gave him time. The second guy hid for as long as he could. Lenders hate that. They looked at his assets and decided to slap a judgment on him.
If you're going to hire a debt settlement service, do it sooner, rather than later.

You may be thinking that bankruptcy may be a better option.Before you do, consider this...

When you file for bankruptcy, you have to pay your attorney ($300-$4500) and the trustee. They'll freeze your debts, add 10% for the trustee, and put you on a payment plan to pay off your debt over as many as 5 years. That's if you qualify for a chapter 13. If you don't make enough money, you'll have to file for a chapter 7. Same difference, except they'll freeze your assets too, and sell them off to pay your debts. Good bye car. Good bye house.

But it doesn't end there. You'll have a monthly audit where you'll have to prove you're trying to improve your situation. Are you looking for a job? Where did you interview? How many times? They'll crawl all over your personal and financial life like the IRS, leaving you feeling violated and exposed. And to put the icing on the cake, you'll have that bankruptcy on your credit report for up to 10 years after you're discharged, so the effects will linger long after you've paid the price.

In my opinion...
The upside to debt settlement is much better than bankruptcy.

If you do get sued, you could always file for bankruptcy later. Your credit is going to be damaged in either case. Personally, I'd rather roll the dice with debt settlement and have the potential benefit of settling your debt for just pennies on the dollar with all records of the occurrence dropping off your credit in 7 years instead of 10.

I've done my homework and found you a reputable debt settlement service. They're safe, reliable, and effective.