Debt Settlement Vs. Personal Bankruptcy - How New Bankruptcy Laws Affect The Debt Settlement Process
Online, June 13, 2010 (Newswire.com) - In 2010 consumers with massive credit card debt have found themselves with few options for debt relief. If they are in a position where they can not meet their payments their options are shortened to debt settlement or personal bankruptcy. The debate of debt settlement vs. personal bankruptcy has taken a recent turn towards debt settlement , commonly know as debt negotiation, do to the new bankruptcy laws passed in 2005.
In 2005 the United States Congress passed the The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Under the BAPCPA consumers that filed for bankruptcy found it much more difficult to qualify for chapter 7 bankruptcy. Chapter 7 bankruptcy is the form where a person's debts are discharged and they receive a fresh financial start. Instead, BAPCPA made it so chapter 13 bankruptcy would be the route that was to be granted most often when a consumer filed bankruptcy. Chapter 13 comes with all of the negatives that chapter 7 comes with but the consumer who filed for chapter 13 would still pay back on average 30-60% of what they owe.
With both forms of bankruptcy a consumer can expect an initial cost of about $2,500 just to file. Chapter 7 and Chapter 13 both come with a severe negative impact on their credit rating for 7-10 years, as well as a negative impact on their employment status. The hardest part about choosing personal bankruptcy when debating between debt settlement vs. personal bankruptcy is the negative stigma, mental stress, and other burdens that come attached with it.
As a direct result of the new bankruptcy laws, Debt Settlement has become much more attractive. When a consumer finds themselves in a financial hardship and really had to make a decision between debt settlement vs. personal bankruptcy, many decided on debt settlement. Debt settlement or debt negotiation is the process of eliminating a consumers unsecured debt by means of negotiating their balances as opposed to only their interest rates. Debt negotiation is a short process and most of the time can have a consumer financially independent in 4 years or less. It is very important that a consumer uses a reputable debt negotiation company that has attorneys represent them and do the negotiation.
Recent times and recent laws have swung the debate of debt settlement vs. personal bankruptcy in favor of debt settlement. Debt negotiation, when using a good Debt Settlement Company , can save a consumer from the constant stress and worries that accompany chapter 7 or chapter 13 bankruptcy. If a consumer finds themselves underwater with debt it is strongly suggested that they take a hard look into negotiation.
Debt settlement is a viable alternative to filing bankruptcy. Most consumers are able to eliminate at least 60% of their unsecured debt while avoiding many of the negative consequences with filing bankruptcy. Consumer must be over $10k in unsecured debt to be eligible for debt settlement.
To locate legitimate debt settlement services for a free debt relief consultation check out the following link:
