If you choose debt settlement as debt relief, you will be paying back your money owing but at reduced balances.
There will be a negotiation with your creditors to lower your outstanding balances; many debts are lowered as much as 40%.
You will continue to make monthly payments until the new balance is paid off.
This would be a good option for those with unsecured debts that they are not able to afford each month.
On the other hand, bankruptcy is much more serious than the aforementioned option.
It is a choice for those who are in desperate need of financial help and should only be considered as a last option.
Bankruptcy will be on your credit for ten years and may affect your ability to get any other credit or loans in the future.
Chapter 7 is what we hear the most of.
With this, your financial obligations are wiped out and forgiven.
Both individuals and businesses have this filing option if they are eligible.
Your property is taken and sold to pay off your debt and you are left with just enough to start over.
Chapter 13 is more of indebtedness reorganization where you are given a payment plan through a bankruptcy court.
This type of filing can only be done by individuals.
Your debt, income and assets will determine the minimum payment.
Each one will either be paid in full, partially or not at all.
Debt settlement, Chapter 7 bankruptcy and Chapter 13 bankruptcy all provide you with relief of your financial obligations.
All have the similarity of helping you but each one is different.
It is important to know the difference in each before you decide which one you will benefit from the most.