There was a time when bankruptcy was considered as the perfect solution to all financial problems.
However, the amendment made in two thousand five has changed everything.
Getting a bankruptcy has become more difficult.
Lenders no longer are at the mercy of borrowers when bankruptcy procedure is filed.
The lender can always point out that the individual qualifies better for a chapter 13 bankruptcy instead of a chapter 7 bankruptcy.
This means that a person who was ready to give up what little assets he or she had and wanted to get out of debt will end up in a debt management program where the debts shall be rescheduled and must be repaid over a period of five years.
Simply said, bankruptcy no longer offers a free ticket out of financial problem land.
That is the reason why debt settlement has become very popular.
Of course, there is no denying that the presence of the stimulus package in the market and the current economic scenario to has played a major role.
However, the fact that bankruptcy is not as profitable as it used to be in the past has also played a major role.
The intensity of the crisis can be understood for the fact that millions of individuals and businesses are filing for bankruptcy despite the tough rules and regulations related to bankruptcy.
This is one reason why the government stepped in with the stimulus package.
As on date, it would be perfectly accurate to describe debt settlement as a solution that is as good as bankruptcy but without the various disadvantages associated with bankruptcy.
There are people who point out that both solutions lead to a drastic reduction in the credit score of the individual.
Yes.
That is true.
However, this reduction is not a permanent one.
On the other hand, your credit score is marked for at least eight to ten years as the information becomes a part of your public record.
As far as debt settlement is concerned, you can always employ credit repair professionals to improve the same.
Another reason why bankruptcy laws have made life difficult is the presence of the mandatory credit counseling session.
Not only does your private and confidential information become public but it also makes you liable to undergo credit counseling by a government expert.
All this can be very embarrassing to say the least.
On the other hand, credit counseling in a debt settlement proceeding is completely voluntary and private.
That, needless to say, has a significant impact on your self esteem.
However, the amendment made in two thousand five has changed everything.
Getting a bankruptcy has become more difficult.
Lenders no longer are at the mercy of borrowers when bankruptcy procedure is filed.
The lender can always point out that the individual qualifies better for a chapter 13 bankruptcy instead of a chapter 7 bankruptcy.
This means that a person who was ready to give up what little assets he or she had and wanted to get out of debt will end up in a debt management program where the debts shall be rescheduled and must be repaid over a period of five years.
Simply said, bankruptcy no longer offers a free ticket out of financial problem land.
That is the reason why debt settlement has become very popular.
Of course, there is no denying that the presence of the stimulus package in the market and the current economic scenario to has played a major role.
However, the fact that bankruptcy is not as profitable as it used to be in the past has also played a major role.
The intensity of the crisis can be understood for the fact that millions of individuals and businesses are filing for bankruptcy despite the tough rules and regulations related to bankruptcy.
This is one reason why the government stepped in with the stimulus package.
As on date, it would be perfectly accurate to describe debt settlement as a solution that is as good as bankruptcy but without the various disadvantages associated with bankruptcy.
There are people who point out that both solutions lead to a drastic reduction in the credit score of the individual.
Yes.
That is true.
However, this reduction is not a permanent one.
On the other hand, your credit score is marked for at least eight to ten years as the information becomes a part of your public record.
As far as debt settlement is concerned, you can always employ credit repair professionals to improve the same.
Another reason why bankruptcy laws have made life difficult is the presence of the mandatory credit counseling session.
Not only does your private and confidential information become public but it also makes you liable to undergo credit counseling by a government expert.
All this can be very embarrassing to say the least.
On the other hand, credit counseling in a debt settlement proceeding is completely voluntary and private.
That, needless to say, has a significant impact on your self esteem.
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