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Both these methods have a major impact on the credit rating, with bankruptcy staying on your report for at least 10 years and settlement for 7 years.
However, desperate times call for desperate measures.
It all depends on how desperate are you? The pros and cons of both the methods should be explored before you decide on which one would suit your financial condition the best.
Debt settlement is by and large a more preferred option.
We shall be discussing this method in this article.
A debtor needs to know that there are mainly 2 types of debt settlement.
One of the methods helps in negotiating the interest rates with the creditor.
Since the credit cards charge the maximum interest rate it becomes a lot easier for the debtor to pay off the debt at a lower interest rate.
With this method the payment amount reduces without a major reduction in the credit rating.
Settlement of debt is a method in which the debtor and the creditor negotiate to reduce the total debt amount in exchange of certain amount paid up front.
If the debtor does not have enough money to pay in one single instalment, it can be negotiated to be paid in monthly instalments for certain duration of time.
The best part about this method is the simplicity of the procedure involved.
This enables the debtor to negotiate the deal himself without any external assistance.
There are settlement companies who excel in settling debt for their clients, so if you are not confident about going through the negotiations yourself you can take their assistance.
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