Benefits of Debt Settlement Over Bankruptcy

5 Benefits of Debt Settlement Over Bankruptcy

Facing serious financial problems can leave you feeling overwhelmed and unsure about the best path forward. Bankruptcy may seem like the only option, but it comes with significant drawbacks. Debt settlement provides a better alternative for many people struggling with unmanageable debt.

When done correctly, debt settlement gives you an opportunity to resolve debt for less than you owe while avoiding the severe consequences of bankruptcy. Keep reading as we discuss five key advantages of debt settlement over declaring bankruptcy.

1. Avoid Bankruptcy Stigma

Filing for bankruptcy drags your credit score down and leaves a lasting negative mark on your credit report. It can affect your ability to get loans, rent an apartment, or find a job. The bankruptcy stays on your record for 7-10 years.

 

Debt settlement allows you to resolve debt without the long-term damage of filing bankruptcy. If you stop making payments, your credit score will still drop initially. But once debts are settled, you can start rebuilding credit right away instead of waiting years for bankruptcy to fall off your record.

2. Settle Debt for Less Than You Owe

With debt settlement, credit card companies and other lenders agree to accept a payment that is typically 40-60% less than the full amount owed. This allows you to resolve debt and make payments you can afford.

Bankruptcy liquidates your assets to pay back only a portion of unsecured debt. Any remaining balances are discharged. However, you may have to give up property and assets and still owe taxes, student loans, alimony, and other non-dischargeable debt after bankruptcy.

Debt settlement lets you cut balances drastically while keeping property, assets, and the ability to pay priority non-dischargeable debts.

3. Avoid Lengthy Bankruptcy Process

Filing Chapter 7 or Chapter 13 bankruptcy means going through a long, complex legal process managed by the courts. You’ll have to provide extensive documentation, complete credit counseling, and surrender financial control throughout bankruptcy.

Debt settlement gives you an out-of-court option to resolve debt through negotiation with creditors. You work with debt settlement companies acting on your behalf to negotiate settlements rapidly rather than getting tied up in lengthy bankruptcy proceedings.

4. Prevent Lawsuits and Wage Garnishment

Once you default on debt, creditors can file lawsuits to attempt to collect what you owe. If they obtain legal judgments, creditors can garnish your wages or put liens on your bank account and assets.

Declaring bankruptcy halts any collection lawsuits and prevents new wage garnishment orders, but it can’t remove garnishments already in effect. Debt settlement stops wage garnishment too. The negotiation process pauses collection efforts and gives you time to resolve balances before creditors can get judgments allowing them to seize your assets or garnish pay.

5. Maintain Control Over Your Finances

Bankruptcy takes control of your finances out of your hands. The court appoints a trustee to oversee liquidation of assets in Chapter 7 bankruptcy. Chapter 13 requires committing to a long-term repayment plan overseen by the court. Any extra income must go toward plan payments.

With debt settlement, you remain in charge of your finances. The flexible process allows you to choose an affordable payment plan. You can settle debt rapidly in 12-48 months. This lets you get out of debt without losing financial autonomy for years.

If you’re overwhelmed by credit card balances, medical bills, or other unsecured debt, debt settlement gives you a powerful alternative to regain control of your finances. It provides a faster, more affordable path than bankruptcy to eliminate debt while avoiding long-term damage to your credit and finances. Just make sure to use a reputable company to ensure smooth negotiations and settlements.

We Provide Professionals to Assist You

At Second Start Financial, we are dedicated to helping you regain control of your life. Our mission is to provide you with effective debt relief solutions that address your unique financial situation. With a team of committed debt specialists, we work tirelessly to deliver the results you need to move forward with confidence.

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Embrace a fresh start and regain the control for your life!

Debt Is the Worst Poverty.

- THOMAS FULLAR

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