There are many people in Florida who have overwhelming debt. When debt problems get really bad, a lot of people are faced with the decision to file for bankruptcy or work out a debt settlement solution. There are positives and negatives to both of these choices.
What is debt settlement?
Debt settlement is an agreement with your creditors to pay off the remainder of your debt for less than it’s worth. This is usually done with a lump sum payment. Because most debtors can’t afford to settle all of their debts at once, they work with debt settlement companies that act as middlemen between them and their creditors.
If completed successfully, debt settlement can get you out of debt without the need to file for bankruptcy. However, many people are still unable to keep up with their monthly payments even while they are working with a debt settlement company. During debt settlement, you will make one lump payment to the company instead of paying each of your individual creditors.
What is bankruptcy?
Filing for bankruptcy is a solution for people who cannot afford to repay their debts, even if monthly payments are lowered. If you qualify for bankruptcy, you may have all or most of your unsecured debts discharged completely. During the bankruptcy process, creditors are legally barred from attempting to collect unpaid debts from you.
One of the main downsides to bankruptcy is that it usually has a negative impact on your credit score. Another downside is that you could potentially lose some of your high value personal property if you choose Chapter 7 liquidation.
Making the right choice
Deciding whether to choose debt settlement or bankruptcy depends on how much debt you have, how much income you have and many other factors. One thing to keep in mind is that debt settlement is only a good solution if you know that you will be able to keep up with all of the payments.
