Debt Settlement vs Bankruptcy

In determining which of the two, debt settlement vs bankruptcy, is best for your financial situation, many times the situation you're in will make the determination for you .

No One Size Fits All For Settling Debt

For example, if you owe $20,000 in credit card bills, have missed the last 3 payments on your mortgage, and have just lost your job and have no other assets - debt settlement is not even an option. If you don't have the money to pay your critical bills, there's no way you can agree to an installment payment plan that will commit you to come up with x amount of dollars each week or month.

In that case, assuming debt settlement and bankruptcy are your only two options - you have little choice but to choose bankruptcy.

Conversely, if you have the same situation as above, but you have $90,000 in stocks, $100,000 in a 401k plan, or a vacation home that is completely paid for - then a debt settlement might be the way to go. In fact, if you were to attempt to file bankruptcy under those conditions, odds are it wouldn't even be granted to you.

How To Determine the Best Debt Settlement Solution

That's why the important facts in looking at debt settlement vs bankruptcy is to determine your exact financial situation. Sometimes financial problems are simply caused by a person's inability to handle money. Other times, it is an illness or the loss of a job that brings on financial hardship.

And on yet other occasions, financial problems are caused by a lack of liquidity. These scenarios are only a few of the possible factors that could put someone deeply into debt.  These are all different causes and they usually require different solutions.

List your monthly income from all source (salary, stocks, bonds, investments), list your assets, list all of your liabilities. list all of your monthly living expenses (rent or mortgage, utilities), all other debts (long term and short). Collect all of this information together, and take it to a financial advisor.

Advantages of Debt Settlement Attorneys and Financial Advisors

Usually, if you want to make the best financial decision, it is worth talking to a financial advisor who specializes in debt problems. This is true, even if you are an expert in financial matters. The most important thing that a financial advisor  brings to the table is impartiality.

Not being emotionally invested in financial problems, he or she can make a clear eyed appraisal of your financial options and provide you with advice that you may not have come up with on your own. In addition, such a financial advisor will know many arcane aspects of the law and finance that you are unaware of.

And even if he is unable to completely resolve your debt problems, some of his advice will most likely help to provide you with as soft a landing as possible as well as prevent your from getting deeper into a financial hole.

So, which is best, debt settlement vs bankruptcy? Many times whichever answer you choose is the right answer to the wrong question. In nearly all cases, the right question should be, how do I get out of the debt hole that I'm currently in?

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