Bankruptcy and debt liquidation are two very different ways of solving the same problem. They all have different aftereffects and all give customers different degrees of relief.
Bankruptcy and settlement share the same goal, ie clearing all unsecured loans. Unsecured debt means that you do not have to provide collateral for the loan. Credit card loans or personal loans fall into this category. In both methods, the creditor's payment is lower than the debt owed by the debtor.
Debt settlement is the process of trying to pay off debts with creditors. The debtor provides a certain amount of down payment as a down payment so that the creditor can eliminate the rest of the debt. The procedure involved is very simple and can be done by the debtor himself. However, many capable clearing companies can help you with this process.
Personal banking needs to be announced in bankruptcy court. According to the debtor's qualifications, the court can award him bankruptcy through Chapter 7 or Chapter 13. Chapter 7 aims to clean up the debtor's assets and use the fund to repay creditors. Whereas chapter 13 requires that you pay the creditors according to the new payment plan issued by the court.
With the introduction of means testing, it is becoming more difficult to qualify for Chapter 7. Through this test, the debtor must prove to the court that due to his inability to pay his payment, his financial status needs to go bankrupt. If the debtor's income exceeds a certain amount prescribed by the government, an economic review is required.
Bankruptcy will lower your credit score and will remain in your report for 10 years. Settlement does not affect credit ratings, but it will remain for 7 years.
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Orignal From: Fast Debt Reduction Solution - Chapter 7 Bankruptcy and Debt Settlement Procedures
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