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Debt settlement may not be the bankruptcy alternative you want

Your money problems may remain on your mind constantly. You may hesitate before making any purchase, even for necessities, because you worry that your credit card will decline or that you just simply do not have the funds to pay for the items. As a result, you may be considering finding debt relief.

Though you know that bankruptcy is one option, you have likely heard the negative stigmas that come along with this process. This misinformation could have you looking into other options, like debt settlement. Though settlement companies claim to provide the help many struggling consumers need, you may want to gain more information before choosing this route.

Is it effective?

Debt settlement involves individuals at the settlement company attempting to negotiate with your creditors for a write off of the debt, or at least a reduction. While this may seem like a promising avenue, you may want to understand that your creditors have no obligation to work with settlement companies. This means that, if you hire a company to contact your creditors, your creditors could refuse to speak with them, and you are still in the same predicament as before.

Additionally, it is not unusual for individuals to not complete the settlement process at all. In some cases, this could be because the settlement company requires fees that place an additional financial burden on clients or because the negotiations with creditors did not prove effective.

What about your credit report?

One reason that you may want to avoid bankruptcy is because of the effects it can have on your credit and credit report. However, it is important to know that debt settlement also affects your credit report. In fact, write-offs or charge-offs can remain on your report for up to seven years, which is almost as long as a bankruptcy filing will remain on your report.

If you want a reliable way to handle your substantial debt, you may want to give bankruptcy closer consideration. Certainly, exploring all of your possible options is a wise step to take, but it is also wise to choose the option that could best help you address your financial issues. If you would like more information on bankruptcy, you may want to consult with a New York attorney about how this route could help you work toward a stable financial future.

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