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Are These Your Best Debt Options?

  • Posted By
    Victoria Stephens

  • Published On
    Sat, September 3rd

  • Reading Time
    4 Minutes

The key to getting out of debt is taking action. Don’t wait for the situation to get worse before you take some steps towards relief and hope, because it will only continue accumulating on top if your problems. It can feel like there is no way out of debt, but you should never give up on your finances. When things are tough and it feels impossible to manage the stress; ask for help. There are plenty of different options available and today we explore some.

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Debt settlement, also called “debt relief” or “debt adjustment” is the process of resolving delinquent debt for far less than the amount you owe by promising the lender a substantial lump-sum payment.

Consumers have the option of settling their debts or hiring a debt settlement firm. If you choose this latter approach, it will cost you an enrollment fee that varies depending on your enrolled amount. Fees average 20% to 25%.

What Debt Settlement Helps With

  • Find out what you can do to manage mounting bills and where to go for help
  • Know your rights when you owe money and how to deal with debt collectors
  • Understand the risks before signing a debt agreement or declaring bankruptcy
  • Find out how to check — and fix — your credit score for free

What is Bankruptcy?

Bankruptcy is the formal process of being declared unable to pay your debts.When you become bankrupt, you don't have to pay most of the debts you owe. Debt collectors stop contacting you. But it can severely affect your chances of borrowing money in the future

Bankruptcy is a great opportunity for individuals and businesses to start fresh by forgiving debts that cannot be paid. This not only benefits the individual or business in question, but also creditors who may obtain some measure of repayment based on assets available during bankruptcy proceedings.

Bankruptcy vs Debt Settlement?

Both of these are designed to erase or forgive certain types and certain amounts of debt. Regardless of which you choose there will be a significant negative impact on your credit score. Personal bankruptcy goes through the court system where a judge, ultimately, decides the outcome. By comparison, debt settlement most often is a private negotiation between someone representing you — an attorney or debt settlement company — and your creditors. Debt settlement is a private transaction.

Now that you've had a chance to think about it you may have decided on one or the other or maybe neither of these solutions are right for your situation. Don’t forget that social workers can help you if you’re going through a difficult time. You may want to get counselling, help and emotional support.

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