Debt Settlement and Bankruptcy
Debt arbitration is a legal process that facilitates the negotiation of debt settlement between the debtor and the creditor. It is evident that numerous people are not able to pay back their debts even though they have the intention to pay. For this reason debt settlement is an alternative to negotiate with the creditors in order to reduce current outstanding balances by a certain percentage.
The following are some common bankruptcy and debt settlement terms
- Bankruptcy Act
- Bankruptcy Court
- Bankruptcy Trustee
- Chapter 7 Bankruptcy
- Chapter 11 Bankruptcy
- Chapter 13 Bankruptcy
Debt Settlement vs. Debt Cosolidation
Debt consoldiation programs grant loans to the debtor in order to pay off all remaining debts, while, usually, high interest is charged on the loan in addition to various fees. In certain cases the debtor may even be required to pay interest to the creditor and as a result, the principal debt balance remains equal. Debt settlement, on the contrary, negotiates with the creditors and an agreement is reached in which the debt will either be eliminated or a certain fixed amount remains to be paid off.
What About Bankruptcy?
Bankruptcy can allow a debtor relief from excessive debt by providing a fresh start. You are able to discharge some or all of your debt and it allows you time to get back on your feet without harassment by creditors. Bankruptcy laws can also benefit creditors by giving them a means to collect at least partial payment of a debt in a timely manner.
Filing for bankruptcy is a difficult decision. For some it carries a stigma of failure or irresponsibility. In fact, the majority of people who file for bankruptcy intend to pay their bills but can’t. By filing for bankruptcy, you are given a clean slate, free of the stress that results from financial problems. Before making such a decision it is important to speak with a bankruptcy attorney. In many cases the bankruptcy attorney will suggest to attempt debt-settlement and will refer you to a debt-settlement attorney for adequate representation.