Selecting between debt settlement and bankruptcy can be quite confusing. Here is what you should know about both of them and which one is right for you.
Many times, people choose filing bankruptcy since they want to free themselves entirely from debt. But while you may be happy to be free from debt, it can affect your financial life in future.
This is because after you file for bankruptcy, it stays on your credit report for some years, which in turn hampers each decision you make. Whether it is buying an apartment, getting a new job or a loan, this issue will be thrown up and spoil all your plans. Hence it is better to opt for another method before filing bankruptcy,
Debt settlement also has some drawbacks. But these drawbacks do not involve debt settlement but the settlement companies. There are many fake settlement companies in the market, which is the main problem.
But, besides that there is no serious damage to your financial status. While you can get rid the entire debt amount by filing bankruptcy, in settlement you can reduce only around 60% from your actual debt amount. But, this amount is good as you do not have to face any harmful effect on your future. So, take this decision with your future in mind.
Eliminating debt is not impossible but it will take some time. People serious about debt relief have to be determined. If your debt amount exceeds $10 k in unsecured debt you should opt for debt settlement.