Often times, financial pros recommend debt settlement as a solution to overwhelming debt. Take a recent story in SmartMoney for instance.
But while the above article offers some decent advice, it fails to mention that debt settlement is only effective for a small number of consumers each year. Filing for Tennessee bankruptcy, on the other hand, is a solution that can discharge debts in nearly every situation - and with no strings attached.
Debt settlement assumes that a consumer can afford to keep up with a payment plan, as well as fees charged by the debt settlement firm. Since most companies require clients to stop paying creditors, you may also incur lasting damage to your credit score.
Compare this with bankruptcy, which was created specifically to help struggling consumers. The federal government recognizes that consumers make financial mistakes - and that inevitable economic downturns make these mistakes even more likely.
Filing has the ability wipe out debt either partially or completely, depending on the type of bankruptcy. Instead of placing demands on the consumer, the bankruptcy system places demands on businesses and the government. The assumption is that these larger entities can absorb the loss of a few bucks a lot more easily than hard-working Americans trying to put food on the table.
Tennessee bankruptcy lawyers have seen bankruptcy provide a new chance for hundreds of clients struggling with joblessness, overwhelming medical bills, underwater mortgages and immense credit card debt.
It's not easy to get out of debt, and many creditors aren't willing to negotiate a payment plan that gives consumers a fair shake. With a Tennessee bankruptcy, you won't have to worry about dealing with biased creditors and lenders. Bankruptcy rewards consumers trying to turn their financial life around.
If you'd like to consider all your options before bankruptcy, SmartMoney offers the following alternatives:
Research Your Options
Thinking of settling your debt or filing for bankruptcy? First make sure your financial troubles can't be solved by aggressively trimming your budget. What can you cut out to squeeze out some extra cash each month? Can you put some of your belongings on eBay or Craigslist? Can you take on a second part-time job? How about locating a free or low-cost debt counselor?
Prepare to Take Action
If you're ready to take on your debt, you need to build a case to prove it's unmanageable. Put all your financial documents in one place. Have you been laid off? Do you have expensive medical bills? Find the documentation that proves it. In some cases, simply getting organized may help you discover a better system for paying the bills.
For debt settlement to work, a lot of things have to happen. Consumers need to be completely honest about their debt situation - no fudging the truth or leaving out information. You must make sure that negotiated payments are affordable and that you won't damage credit by intentionally skipping payments - otherwise you're just going to increase debt woes by racking up debt settlement fees and wrecking your credit score. Finally, ensure that your debt settlement company or credit counselor isn't a scam by confirming their credibility - for instance, by checking with the Better Business Bureau.
Of course, the above advice still assumes that creditors are going to work with consumers. Keep in mind that credit card companies and lenders can get back more of their money by garnishing your wages or foreclosing on your home than they can by settling. They simply don't have the motivation.
Bankruptcy legally requires creditors to deal with your debts. But you won't have to deal with creditors. Your Tennessee bankruptcy attorney and a court-appointed bankruptcy trustee will deal with them for you.
There's no guarantee that paying a debt settlement company or credit counselor will get you out of debt. But the moment you file for Tennessee bankruptcy, you'll enjoy freedom from debt collectors and the breathing room to finally get back on track financially.
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Tips for Refreshing Finances in 2012 with Tennessee Bankruptcy: January 1, 2012