is debtrelief betterthan bankruptcy by rajakamil

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									Is Debt Relief Better Than Bankruptcy



Is debt relief a better option than bankruptcy if you're having financial troubles? There are strong arguments
for both sides. There's actually no hard and fast answer to the issue. It depends entirely upon your own
financial situation. These are some of the most important things to consider.


==> The Pros and Cons of Bankruptcy


The main major benefit of bankruptcy is that you essentially owe nothing if it's done correctly. You just
walk away.


With debt settlement, you still have to cut a sizeable check every month to the consolidation company. With
bankruptcy, however, you just don't have to pay anymore.


On the other hand, a bankruptcy will knock your credit score down by 200 to 250 points, turning any credit
score into a rock bottom score.


By contrast, debt consolidation which is usually reported by creditors as "Settled" on your credit report will
generally only impact your score by about 50 points.


The score isn't the only thing. Future creditors who see a bankruptcy on your report will know you
essentially walked away from debt commitments. They're much less likely to trust you in the future.


==> The Pros and Cons of Debt Consolidation


The main drawback of debt consolidation as opposed to bankruptcy is that you're not actually out of your
payments. You still have to pay back your debts, albeit a smaller amount.


One huge benefit of debt consolidation over bankruptcy is that it can address many other kinds of debt that
bankruptcy can't get rid of, including child support or alimony.


With debt consolidation, if you're working with a credible company, you'll also have someone to take you
by the hand and walk you through the debt repayment process.


One of the main things you need to ask yourself before starting any kind of debt relief program is whether or
not you can really realistically stick through the program.


Although there are no nationally verifiable statistics on debt relief follow-through rates, many estimate the
dropout rate to be around 45%.
In other words, these are people who'll spend months or years going through the process of paying off debt
and then end up throwing in the towel anyway.


This ends up costing them a lot of money and delays the recovery of their credit rating.


Debt relief may very well be a better option, but only if you can realistically stick to the plan. If you can't
afford to pay even a reduced monthly amount, then you may be better off filing for bankruptcy.


As you can tell, there are a lot of factors that go into weighing this decision. For some, the right direction to
go is to wipe their debt clean. For others, that might not even be possible due to the nature of their debt. If
you need help making the decision, don't be afraid to ask for a professional opinion.


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