In terms of affecting your credit score and potential obtain future credit offers, debt settlement companies are a better option than filing bankruptcy. However, there are additional options to consider when making the decision between debt settlement and bankruptcy.
The main consideration is that filing for bankruptcy can allow a consumer to completely eliminate their debt. A debt settlement company can’t do this, and a consumer who chooses this route will still be financially obligated to the debt.
An additional consideration in the favor of bankruptcy is that most debt settlement companies aim to reduce the overall amount of debt their consumers owe. While this seems to be a positive development, a consumer may not view it in such a positive light come tax time, when they will can be held responsible for the amount of debt that is written off of their total debt.
However, for many consumers, filing bankruptcy has a negative effect on their credit that far surpasses its benefits. Bankruptcy will be reflected on credit reports for up to ten years after filing. To future credit lenders, the appearance of bankruptcy on a credit report signals a definitive inability to pay one’s debts. Debt settlement will also appear on a consumer’s credit report, but frequently, they do not remain on the report for as many years. Additionally, credit lenders are more likely to view debt settlement programs as an attempt to honor the debts owed. Since the consumers are actively trying to repay a debt, credit lenders are more likely to see the debt settlement option as the more financially responsible one. Ultimately, the long term financial benefits of choosing a debt settlement company will outweigh the temporary financial relief offered by filing for bankruptcy.
Concluding, by a thoroughly researching and then comparing as much debt settlement services, borrowers will be able to determine the service that meet your specific financial situation, moreover, besides the cheapest interest rate available on the market. For instance, read our last debt settlement company review: Review of Lowermybills.
However, it’s recommendable going with a seasoned and reliable debit counselor before arrive to any conclusion, this way you save time because of specialized advise & cash by obtaining better results in a reduced span of time.
Hector Milla is editor of the Government Debt Consolidation Loans website – by visiting you can see his top ranked debit settlement company recommendation.
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