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Is bankruptcy or debt relief better?

On Behalf of | Jun 14, 2022 | Blog, Personal Bankruptcy

Finding yourself neck-high in past-due bills may result in climbing stress levels and sinking hope of getting back on solid financial footing. You may wonder if you should contact one of the many debt relief companies or declare bankruptcy.

As the mail pile grows with overdue bills and collections notices, you may find yourself on the brink of making a snap decision of contacting a debt relief company since you believe that will save you from total financial ruin. Before doing so, take a closer look at what this path may result in short and long-term.

What service does a debt relief company provide?

The purpose of such a company is to negotiate with creditors and settle for less than the total you owe. The hope is that you can pay off the settlement and keep collections from giving way to lawsuits in small claims court. Remember that a debt relief company charges you for their services and may tempt you with loan consolidation terms that appear favorable. However, if your goal is to get out of debt, taking on more will only add to your long-term stress.

What does bankruptcy do?

Declaring bankruptcy does not have the negative stigma attached that it once did. People find themselves filing for bankruptcy to achieve a total financial reboot. Bankruptcy does not mean you will lose your home or cars or all of your money. It does mean that at the end of the process, whether you do a repayment plan under Chapter 13 or liquidation under Chapter 7, you should come out with a complete financial restart.

At the end of the day, if you want to get out of debt in the next few years, bankruptcy may prove the most viable option. Speaking to someone who can help you decide may get you back on track to decreasing bills and stress.

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