For a long time, it was believe that the only way to eliminate debt without paying it in full was to file for bankruptcy. The funny thing was that debt settlement had been used as financial tool since nineteen eighties. However, since bankruptcy was very convenient and the long term effect was not very high considering the benefit that it provided, most individual borrower preferred sticking to consumer and personal bankruptcy.
There are numerous instances when individuals have filed for bankruptcy more than once. However, a couple of things changed everything. For starters, the 2005 amendment to the bankruptcy law made it difficult to file for bankruptcy. Secondly, it imposed rules and regulations like mandatory credit counseling and a mandate duration of a six to seven years of within which the individual could not file for bankruptcy again.
All this combined with the fact that bankruptcy will wreak havoc with the credit report meant that it was no longer the best way to solve debt problems. This combined with the fact that the recent recession is one of the worst in the baby boomer generation means that there was an urgent need for another debt relief option.
That is were debt settlement enters the picture. Today, you can get in touch with your service provider and convince him or her to give a fifty to seventy percent discount. Once this is done, thus the balance amount has to be repaid over a period of two to three years.
As far as the impact on credit score is concerned, the settlement works in the same way as bankruptcy. However, there is no need to approach the court there is no need to reduce all your assets to zero and there certainly is no need to convert all your private financial information into public news.
What makes this even more convenient is that a debt settlement offers a much better deal for the average a lender as well. Unsecured lenders have a lot to lose when the credit card holder files for bankruptcy.
The stimulus money is around and this makes sure that the lenders were in a position to absorb fifty to seventy% loss suffered during every settlement deal. From practicality as well as from the morality point of view, debt settlement is the infinitely better than bankruptcy. This is true for the ordinary borrower as well as the ordinary lender.
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