Debt settlement can be the right option for those people who are struggling with overwhelming debt. There are several other debt relief options those can help you eliminate your debt worries. However, exploring the benefits of each option is an important part of the selection procedure. Before selecting any, make sure you have thoroughly revised the procedures and terms of each options. Here we will be dissecting if debt settlement is a feasible bankruptcy alternative.

What is a Debt Settlement Program?
In a debt settlement program, a debt settlement company negotiates with your creditors on your behalf to reach the goal, which will write-off up to 50% of your unsecured debt. In a debt settlement program, you go on making payments to your creditors for a period of up to 36 months. At the end of this period, the creditors eliminate any remaining credit so that you may enjoy a debt free life.

However, though filing Chapter 7 bankruptcy can let you become debt free within just 4 to 6 months, it is very hard to qualify under the 2005 bankruptcy code. If your income is above the state median or you have non-exempt assets, you will most likely not qualify to file a Chapter 7 bankruptcy. However, a debt settlement procedure can help you shed off your debts without the stigma of fling bankruptcy.

Debt Settlement Program: Fees and Charges
Everybody knows that cowboys exist everywhere and debt settlement industry is obviously not an exception. Check with the Better Business Bureau (BBB) to make sure the settlement company you are going to hire is a reputed one. Again, check if they follow the Federal Trade Commission’ (FTC) rules. Under the FTC telemarketing rules, they cannot charge an upfront fee from the consumer, and should receive payments on a monthly basis.

Credit Scores
If you file Chapter 7, it will remain on your credit report for 10 years. This may make things difficult for you when you will approach for a loan in future. While a debt settlement and Chapter 13 bankruptcy both remain in your credit report for 7 years, if you continue to make payments according to the settlement, you credit score will start improving after a few years.

Though a debt settlement program may be the best bankruptcy alternative, it is important to discover all your options so that you can avoid mistakes.

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