When faced with too much debt, people have limited options to get out from under their financial struggles. One of these options are trying to settle with creditors. Everybody over the last few years has seen the late night commercials or the bill boards where a company promises to get them out of debt through negotiation.
It is true that creditors are willing to settle their debts. In my experience, I have seen a number of people settle their debts for as low as twenty cents on the dollar. It is not impossible to settle debts. However, if you have limited funds, are not in a position to make large lump sum payments, your wages are already being garnished, or your bank accounts are being levied, then you are not in a position to negotiate and settle. Too many times, I have seen people attempt to settle debts and find themselves in a worse position.
Again, debt settlement does work. However, it will only work if you catch your problems early. Moreover, it will work if you have the ability to actually settle your debts. You can settle for a $200 monthly payment, if you cannot afford a $200 monthly payment. You can’t settle a lump sum payment of $2500 on a $10,000 debt, if you do not have $2500 to pay it with.
This is where other options such as bankruptcy become the best option. If you do not have the ability to negotiate and settle your debts, then you most likely qualify for bankruptcy. The bankruptcy laws are here for people to get a fresh start. This means that bankruptcy is available for people to start over financially. Bankruptcy will give you a clean slate in order to rebuild credit and a financial stability. Speak to a bankruptcy attorney to find out more information on Chapter 7 and Chapter 13 consumer bankruptcies.