Should you go for Debt Consolidation or Debt Settlement ...???

It is often seen that individuals becoming a little confused in choosing whether to avoid Bankruptcy through Debt Settlement or Debt Consolidation.However, both being peaceful alternatives to Bankruptcy. It is advisable that the consumer analyzes the financial situations he is into in order to decide the more appropriate option for him. It depends on the ability of the individual to check the amount wants to save on his bills in order to select the right program for him.

Now there lies a basic difference between the debt consolidation and the debt settlement program. In a consolidation programs all the obligations of the consumer is carried forward which can accumulate to a lump-sum amount, however the interest rate that would be charged on the consumer would be much lower than the rate charged by normal creditors.Now the financing company or bank which provides the consolidation amount will have to paid back by the consumer through monthly installments. Now, this amount will be much much lower than previous bills demanded by the creditors. Thus, there will be huge savings on interests but the principal amount shall remain the same.

In case of a debt settlement program the actual loan amount is substantially reduced. Debt Settlement companies shall actually negotiate with the creditors and reduce the amount to be paid back to 50 to 70% of the actual amount. However , debt settlement leaves a scar on the credit report which makes it difficult to get future creditors approve loans.

Both the strategies however, have different comforts and discomforts from an individuals personal point of view. For some it might be a more feasible option to pay the lump-sum amount at once and count savings on the interest charges. However for another it might be more of a viable option to actually pay less than the borrowed amount.

Is Bankruptcy advisable .....???

There is a myth about bankruptcy that once a person declares bankruptcy he gets a chance to start all over again in a fresh way. However the truth is much more harsh than the myth.

Bankruptcy in reality is a torrid and devastating event which actually leaves a person with irreparable damage. The word "Bankruptcy" might chill up spines and come as a viable option when things go from bad to worse.Any individual who is facing the prospect of bankruptcy must re-think over it again as it would be living a nightmare, once bankruptcy is filed.

Why is it advisable to avoid bankruptcy ?

Filing a bankruptcy is not smart move neither it should be recommended. It is something which leaves you with no scope of improvement once you declare you are a bankrupt. In most cases family life is distressed and a dark future awaits.

Bankruptcy is listed as "one of the five most life-changing negative events" along with divorce, severe disability , illness and losing a loved one. You need to make sure that you are not being fooled, when your lawyer(s) advise you to file bankruptcy, as the consequences are an extreme.

Types of bankruptcy:-
1. Chapter 7 Bankruptcy is absolute bankruptcy where the credit report is affected over the next 10 years.

2. Chapter 13 Bankruptcy is a similar to a modified repayment plan in which exists on the credit report for the next 7 years.

However, whichever form of bankruptcy you may go for , shall be a major a form of discomfort wherever you go for jobs or loans. It is inquired everywhere whether an individual has ever filed a bankruptcy or not. If someone lies in order to get a loan, then it is considered as a criminal fraud.

Bankruptcy can be avoided with proper credit counseling. Debt consolidation is also a very sensible alternative. A quicker win over through bankruptcy is actually a loss of a life-time.