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Debt Settlement Or Bankruptcy
The most basic form of a debt is a loan. The financial market was performing very well until the recent recession phase hit the market. The recession phase forced companies to give lay offs, deductions in salary which has affected the finances of people, they were not able to repay their monthly credit card bills, their loans on time. The financial institutions were phasing a tough time to collect their debts, which led many financial institutions to move out of market. This recession phase has forces people to understand the importance and value of managing their debts.
The current financial market offers and demands management of debts in a right direction. The debts can be classified into, Secured debts- these debts are backed by collateral security such as home, car or any other asset. Secured debts cover home loans, car loans, re-mortgage and many more. Other debts which are not owed by any collateral security are called Unsecured debts, like personal loans, credit cards, etc.
The people with debts were declaring themselves bankrupt during recession phase and they were deprived of their home, car and all other ...
... assets because of bankruptcy. The people have common notion that they will be relieved from clutches of debts by going bankrupt, which is not a truth. It is very important to understand what is Bankruptcy and its consequences.
Bankruptcy is a legitimate process in which debtor declares disability to pay outstanding debt and allows lender to sell or encroach his assets. A debtor can apply for bankruptcy under chapter 7 or chapter in accordance to his financial situation. Bankruptcy makes finances worse, credit score is hit all time low, it leads you on a road where you will not find any bank or finance institution to provide you and your family a loan when required.
The US government came with plan to restrain increasing debt in market, the federal government of US advised financial to pull their current pending debts and settle them as bad debts. The debtor who persist a debt of $10,000 or more could negotiate and blot out debts. There were relief agencies persisting in the market who helped and negotiated with lenders on behalf of them to reduce interest rates and outstanding debt balance.
The debtor will be back on debt free road within 3 to 4 years after debt settlement with the help of these relief agencies. There are many relief agencies in the market, debtors certainly needs to check authenticity of these agencies, the right way is to take help of debt network who could scrutinize & analyze debtors need and direct him to suitable agency.
Why debt settlement is better than bankruptcy?
Debtor with financial distress has to choose between bankruptcy and debt settlement to get rid of debts. Certainly debt settlement is more beneficial when compared to bankruptcy. By approaching a well renowned and reputed debt settlement firm a debtor will again travel on a road of no debts. His credit score will return back to normal in 2-3 years which is the time he will pay back to his creditors without fear of losing his assets or goodwill. He can again have a option to use the helping hand of lenders if required in future.
Finding a right and suitable legitimate debt settlement firm is not that complicated the only thing a debtor must know where to look. It would always be wise to employ the service of debt relief network that will determine companies for you and ascertain that they are authorized and genuine.
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