If you ever find yourself in a situation where money problems and debt threaten to take over your life, you’ll usually have to make an important and difficult decision. When you just can’t keep up with the payments and phone calls any longer, you’ll often be forced to make a choice between debt settlement and bankruptcy to fix the problem. Although bankruptcy is a frightening word to many people, some will gravitate toward that option because they feel it is the easiest solution or the only solution. The thought of having all of your debts wiped out in one fell swoop is comforting for some people, regardless of any negative impact choosing bankruptcy may bring. The reality is that in most cases, opting for debt settlement over bankruptcy ends up being the wiser choice for a variety of different reasons.

Basically, debt settlement refers to coming to agreements with your creditors and reducing your debt load in an organized payment plan. A consumer proposal is one form of debt settlement that enables you to pay a portion of your debt, but have it count as being paid in full. This option will be discussed and likely offered as a solution if you visit a consumer proposal Toronto office when you have serious money problems. With bankruptcy, nothing is paid to creditors and you may even end up losing some assets in the process. The reason a creditor would even consider agreeing to a debt settlement situation is because they know that with bankruptcy they won’t be getting any of their money back, and with a consumer proposal Toronto or other form of debt settlement, they will at least get some of it back.

Your credit score is one of the primary reasons that debt settlement may be more attractive than bankruptcy. If you’ve let yourself get to the point of considering bankruptcy you likely have suffered some sort of credit damage, but it will get even worse if you choose bankruptcy over debt settlement. Of course, debt settlement will affect your credit score too, but the damage will be less and it won’t follow you around as long. Plus, as you continue to make the payments on the debt settlement agreement, your credit score will gradually start to bounce back. In some cases, bankruptcy will actually send your credit score back to zero, which makes it quite difficult to secure any type of credit in the future.

With debt settlement, your history will also show that you’ve paid off your debts in full, which is an attractive aspect for future lenders. The fact that not every type of debt is covered by bankruptcy in Toronto is another advantage debt settlement enjoys. Only unsecured debts like credit cards, loans and lines of credit are covered by bankruptcy. Things like your home, car, spousal support or child support debt is not taken care of. Many people mistakenly believe that everything they owe or have ever owed will be wiped clean with bankruptcy in Toronto, but that just isn’t the case.

With over 30 years of experience bankruptcy Brampton experts have been helping Canadians just like you.

With over 30 years of experience Bankruptcy Trustee Toronto experts have been helping Canadians just like you. http://www.afarber.com/

Author Bio: With over 30 years of experience bankruptcy Brampton experts have been helping Canadians just like you.

Category: Finances
Keywords: bankruptcy, debt, debpt consolidation, finance, credit, business, family, money, economics