Bankruptcy Vs. Debt Settlement - How New Federal Laws Make Debt Settlement The Better Option
Bankruptcy used to be the easiest way to eliminate debt however with these new FTC laws in place, entering a debt settlement program has become far less risky. If they don't settle your debt you don't have to pay a dime.
Online, October 13, 2010 (Newswire.com) - Getting out of debt via a debt settlement process used to be a very risky decision. Not anymore. New laws passed by the Federal Trade commission have made the debt settlement process a much more legitimate option for consumers and small businesses seeking debt relief. These laws effectively ban debt relief companies from collecting upfront fees from clients. If they can't settle your debts, you don't have to pay a dime.
Before 2005 many consumers experiencing financial hardship would apply for Ch. 7 bankruptcy in order to eliminate unsecured debt eliminate unsecured debt . However in 2005 new laws were passed that made Ch.7 bankruptcy much more difficult to qualify for and far less advantageous for consumers. The bankruptcy process is now very complicated and will affect your credit report for at least 7 years.
Ch. 7 bankruptcy is considered the "fresh start" bankruptcy. It used to be advantageous for consumers and small businesses to file Ch. 7 because almost all their unsecured debts would be eliminated and it was easy to qualify for. Now however you pretty much have to be completely insolvent with no income coming in to qualify for Ch. 7 bankruptcy. You are much more likely to qualify for Ch. 13. This is similar to the debt settlement process except for one major difference. Ch. 13 bankruptcy will hurt your credit score much worse and longer than debt settlement.
When comparing Ch. 13 bankruptcy and debt settlement it is obvious that debt settlement is the better option. Most consumers are able to repair their credit within 3 years with a settlement while bankruptcy will take at least 7 years. Also with these new FTC laws in place, entering a debt settlement program has become far less risky. If they don't settle your debt you don't have to pay a dime.
The best way to locate legitimate debt settlement companies is through a Free Debt Relief Network . They will be able to provide consumers and small businesses with free consultations and help them determine what debt relief option makes the most financial sense. Debt relief networks are free to use and a good starting point on your way to becoming debt free.
Check out the following link for a free consultation from a top debt relief network:
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Tags: bankruptcy, credit card debt, debt relief, debt relief companies, debt settlement, debt settlement companies, eliminate unsecured debt
