Bankruptcy and debt settlement are two alternatives for those people with massive debt. There is always a long debate as to which option to choose. Bankruptcy has traditionally been used to bail out those in debt. However with the passing years the bankruptcy rules have undergone a change. Bankruptcy provides two kinds of protection. The first one is for your current assets. The second one is to protect your future earnings.
Bankruptcy gives protection to your current assets like your house, furniture and personal belongings. They are exempt from bankruptcy proceedings and you are not required to pledge them to discharge your debts. Most states provide homestead protection to make sure that you do not loose your house on filing bankruptcy. You will be able to enjoy this protection in case of bankruptcy under chapter 7.
Under Chapter 13 of bankruptcy your future earnings are under obligation. If you file for bankruptcy under chapter 13 or rather if the court finds that you are not eligible for chapter 7 bankruptcy you will be asked to file under chapter 13. Under this chapter your future earnings get pledged. It is more like a debt settlement. You give an assurance to pay back the debt under a structured settlement in a specific period.
Filing under chapter 7 will always be of an advantage to you. In case you are to go in for chapter 13 bankruptcy you should rather consider a debt settlement. You will move out of debt faster. So plan your move accordingly.
Debt relief comes with a variety of choices – you can choose anything from debt settlement to debt consolidation. For consumers who are at least $10k in unsecured debt it generally makes financial sense to consider debt settlement. It is wise to compare debt settlement companies however to make sure you find a legitimate service. To find proven and legitimate debt relief help in your state check out the following link: Free Debt Advice
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