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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
  • Debtor
  • Creditor

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.

 

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