Bankruptcy Vs. Debt Settlement – A Straight-Forward Comparison

this post answers the following questions
1. What is the difference between bankruptcy and debt settlement?
2. Is bankruptcy attorney important?
3. Can bankruptcy provide relief and protection for you?
4. Can debt settlement reduce debt?
5. Can debt settlement relief you from collection harassment?

Those who find themselves in precarious financial situations have many tough decisions to make, and when it comes time to decide if bankruptcy is the right decision there’s a lot of conflicting information out there. Every situation is different and the best option is to speak with a bankruptcy lawyer. We’ve compiled the basic information so you can understand the major differences between bankruptcy and debt settlement.

Protection Against Foreclosure, Lawsuits, Wage Garnishments and Repossession

If you’re worried that your home will be taken away, your wages will be garnished, your vehicle will be repossessed or you’ll be hit with a lawsuit, then bankruptcy is likely the best option for you. While your bankruptcy attorney will be in the best position to give you the full specifics for your particular case, the bottom line is that debt settlement does not necessarily provide relief or protection from these events. Bankruptcy does.


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Eliminating or Reducing Debt

There are several types of bankruptcy filings and there isn’t one option that’s the standard best decision for everyone. That’s why it’s important to have a bankruptcy lawyer assess your situation. Depending on the type of bankruptcy you file, you’ll be able to reduce or completely eliminate debt. In some cases you’ll keep your assets while in others you will forfeit them. If you reduce your debt, you’ll be responsible for paying a certain amount each month, as set out by the bankruptcy court.

Debt settlement can also reduce debt, but in these situations your debt settlement company will be working directly with creditors. It will be at their full discretion if they accept your settlement or not, and how much you’ll pay will need to be approved by them. It’s often simpler and more advantageous to work with a bankruptcy court than directly with creditors.

Collection Attempts | Collection Agency Harassment

There’s nothing more frustrating than to not be able to make payments and have a collection agency calling you at all hours of the day and night. From the moment your bankruptcy lawyer files your bankruptcy, your creditors are legally required to stop all attempts to collect the debt. No more phone calls, no more letters – nothing. This can be a huge relief and can take off a lot of the stress of the situation.

When you work with a debt settlement company, creditors may or may not stop trying to collect from you. If a creditor doesn’t accept the terms of the settlement, then they will likely continue to make attempts to collect the debt. While a settlement can provide some relief from collection harassment, it does not provide the legally guaranteed relief bankruptcy provides.

Dealing with financial problems can be more than an annoyance. The stress, worry, and fear of what comes next can negatively impact your personal and professional life, and can create serious health issues. Bankruptcy might be the solution that helps you finally get out from under the debt you’ve been living with, but only a bankruptcy attorney can properly assess your situation.

Agnes Mack is a freelance writer who writes about personal finance for Las Vegas bankruptcy attorney Anthony Deluca of Deluca & Associates.

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