Debt negotiation can be a better option than filing bankruptcy?

Millions of American consumers are struggling to pay off the debt after the recent economic meltdown. In such situation, the debt stricken consumers either enroll in debt settlement programs or file bankruptcy to eliminate their debts. But before you choose anyone of the programs you should acquire appropriate information on them.

A closer look at the function of debt negotiation and bankruptcy:

You can hire the services of a debt arbitrator to negotiate with the creditors on your behalf to lower the interest on the principal balance. The function of debt settlement and bankruptcy is completely different as you pay less than you originally owed to the creditors in debt negotiation. But if you declare bankruptcy under chapter 7 then you can discharge some debts. In chapter 13 bankruptcy you can lower the payment by extending the repayment plan over a longer period.

A closer look at the debt negotiation process:

Debt negotiation is an uncomplicated process; where you can hire the services of a debt settlement company or directly approach the creditors to negotiate your own debts. The skilled negotiator negotiates with the creditors to lower the interest rate on the principal balance. Before you start repaying according to the new settlement term, the debtor and the creditors needs to give mutual consent on the settlement offer. The lenders will not agree to settle your debt if you make a timely payment. Therefore, before proposing a settlement offer you need to default on your payment for 2 to 3 months so that your offer is approved.

A closer look at the procedure involved in bankruptcy:

A legal process is involved while filing a petition with the bankruptcy court. Once you file bankruptcy there will be a decrease in the number of collection calls from the debt collectors. You need to successfully complete two hours of credit counseling session before filing a petition with the court. Your entire process will be complete within 6 months if you file under chapter 7 bankruptcy. But if you file under chapter 13 bankruptcy you can complete your repayment plan within 3 to 5 months.

But remember that debt negotiation can initially affect your credit report but eventually it will improve once your start making your payment. But the stigma of bankruptcy remains on your credit report for 7 to 10 years and it might be difficult to apply for new loan in future.

Best Debt Negotiation Programs

There are hundreds of debt negotiation companies available to choose from and they all claim they can get you out of debt fast. There are a few that have better reputations than the rest. Here are our top recommended programs to help you become debt free:

• Curadebt Debt Relief - get a free debt quote and free debt reduction plan
• Do It Yourself Debt Negotiation - eliminate your credit card debts in 6 to 18 months