These days, getting relaxation in the amount of debts is the primary need of every individual.
Due to the economic turmoil, many people are suffering from the burden of massive credit card debts.
No matter how hard they are trying to escape from this burden but they are not able to find the path that would lead them towards the option of debt relief.
In this way to help people from this miserable situation, the federal government has introduced the option of bankruptcy and debt settlement in the market.
Both of these methods are legal and function under the full support and supervision of the government officials.
Both of these methods have their own benefits and disadvantages.
In the given article, we are throwing complete light on the pros and cons of the above mentioned methods.
Bankruptcy is taken as the traditional way for the reduction of liabilities where as debt settlement is modern approach for getting rid of this burden.
The process of bankruptcy involves many legal tests and other official paper work but no such formalities are involved in case of debt settlement.
To get a settlement deal, a person has to pass certain tests.
Bankruptcy is time taking while on the other hand debt settlement is not at all a time taking process.
Future consequences of insolvency are very bad whereas the long run affects of settlement deals are not bad.
Insolvency brings bad impact on a person's credit report due to which a person gets ineligible of borrowing loans from banks and other financial schools for the next 7 to 10 years.
Debt settlement deals also bring negative impact on the credit report but this is only for a shorter period of time.
This will not stay on the credit report for several years.
The process of bankruptcy is expensive as the legal attorneys charge high amount of fees while on the other hand, the settlement deals are affordable and do not create any kind of burden on the pocket of the people.
From the above conversation, one can easily judge that debt settlement is a far better option than bankruptcy.
Settlement deals are not only beneficial for the borrowers but in fact, they are favorable for the lenders as well.