Fluctuated economy and burst in the market of real estate have pushed borrowers to the situation where they can no longer keep their self updated with the payments of credit cards and consumer debts. When these groups research for the solutions they ultimately stop at various debts relief solutions. These options include debt settlement, bankruptcy debt consolidation, and debt counseling etc. out of the four the Debt settlement and bankruptcy are getting common due to the total reduction in outstanding balance and decreasing current payments.

If you look at bankruptcy option than debt settlement then filling chapter 7 and 13 are two options available to the people. Chapter 7 allows for steep reduction or outright dismissal of debt. But these chapters are going to be decided by the court depending on the result of mean test which is mandatory or any bankruptcy filing. The mean test is an assessment of the filer’s income and expenses which will be set them against the debt redemption standards as set by IRS. After this test it will be finalized that if a borrower is not able to pay much as repayments and short fall of income then he come under chapter 7 but is a filer can even pay hundred dollars then he will get chapter 13. In both cases customer have to get debt counseling and budget analysis.

Debt settlement which is also termed as debt negotiation is new and aggressive way of debt relief having many advantages and above counseling, consolidation and bankruptcy. The best incentive on this particular process is the reduction in 50% of the balance on each account enrolled into the settlement. Accounts which can be the part of route are credit cards, department store debts, unpaid utilities, medical bills and other unsecured debts.

Reason why this process is more beneficial than bankruptcy is:

Being ardent in sealing debt settlement can prevent wage garnishment and attachments. If your creditors know that you are in the process of debt settlement then they do consider that at least some of the money will be paid by you to them. Loan providers therefore will not initiate any legal action during the procedure.

It eradicates your debt totally. Outstanding balances can get a dip of 40% to 70% depending on the loaners and on average total balance can be reduce by 50%.

Value of secured assets will be secured by opting out this option. When a debt pressure of unsecured credits will be reduced then the pressure from the secured asset will also be lessen. It also improved the chance for homeowners to get mortgage loans.

Complete pay offs as reduction in the debt will bring ease in monthly installments and they will last no more than 48 months.

Debt settlement is very advantageous choice to follow as debt relief option. It can also get good remarks on your credit reports.