Credit Card Debt Settlement Opposed To Bankruptcy In The United States – Which Is Best For You?
If you are in a dilemma about whether to file for bankruptcy or work out credit card debt settlement then you need to know a number of things to come to the final decision which is best for you.
So, you are in the position where you have been unable to pay off your credit card/s for quite a while now and its got to the stage where your card/s company have sold on your debt to a debt collection agency. Of course, the collection agency will contact you very soon as they want to get “their” money back and also profit too. They want immediate payment.
Yes that’s a fact, they want their money and they want it now, but what you will tend to find is that the amount they want is a much-reduced amount to the actual balance of the debt. You may not find that initially this is the case however, but in time they will try to negotiate with you upon the payment. If you do go ahead and pay them then the debt collection agency will receive – lets say around 60% of this amount as a commission, and the lending company will then receive the final 40% – a much reduced amount to what is actually owed to them.
You must be asking why the original creditor would be willing to accept such a small amount compared to what is owed, but before I answer that, lets have a quick look at some figures just to make all this clear.
Although the card company is not going to receive anything near the initial amount owed to them this $3,200 is still more than they would attain in Chapter- bankruptcy. If you were to go for Chapter 7 bankruptcy they would receive absolutely nothing!
The credit card company will obviously receive a much-reduced amount to what is actually owed to them and the reason they are willing to accept this is that they compare this figure firstly to what they would get if you were to declare Chapter- bankruptcy – they would get less. If you were to declare Chapter 7 however, they would get absolutely nothing!
So you can in time end up paying far less than you would do otherwise via debt settlement. Anything else to think about? Yes, actually. If you are to take on bankruptcy this will remain on your credit file for a total of 10 years, affecting your credit for that period of time. If you were to take on debt settlement your file would be “tainted” for 7 years only.
Further, if you are to discontinue with the plan at any stage your case will be dismissed and you will be right back at the beginning once again, having paid all those added fees, which you lose anyhow.
Therefore, unless your debt is very much insurmountable, it most certainly makes very good sense to focus upon the debt settlement route.
Learn more about credit card help and debt consolidation program to suit your needs.
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