When choosing between bankruptcy or personal debt settlement plans, you should choose the settlement.
While bankruptcy technically is a type of debt settlement, you should figure that you generally have a choice between an official bankruptcy and an official debt settlement. In most cases, the debt settlement is a better choice. Granted, once you get to this point, you will not have the best credit rating at all. However, few things are worse for your credit than a bankruptcy. Basically the bankruptcy shows that it is possible you will not pay back your debt at all – which means that you are a high risk.
A personal debt settlement on the other hand will have a different connotation. Basically, if you are getting one of these debt settlements, it will mean that you have contacted your creditors and worked out new interest terms. The reason that this is helpful is that you will have a much better chance of paying off your debt. While this will not recover your credit completely, it will mean it takes less time for it to recover. Also, you’ll be able to feel secure that you have paid off your debt.
Another advantage over a personal debt settlement as compared to filing for bankruptcy is that you will be taught how you can keep out of debt in the future. Not only that, but some of the skills that you learn through paying off your debts in a structured manner will help you out in the future when you have more debts.
Some debt settlements will also reduce the amount of debt that you have, total. While this is also something that can happen if you file for bankruptcy, this is still a better method of getting your debt reduced.
Personal debt settlements can help you to avoid bankruptcy in other ways, for instance if you decide to settle your debt, you might be able to get a debt consolidation plan. What this will do is to consolidate all of your debts into one monthly payment that is generally lower than what you were paying in the past. These plans will also make it easier for you to pay off your debts by lowering your interest payments.