What are the various points because of which debt settlement has overtaken bankruptcy as the most popular debt relief option? The first modification made by the 2005 amendment was the compulsory credit counseling session done within 180 days of filing of a chapter seven bankruptcy.
If the government approved expert does not agree to such a move, you obviously are going to face a lot of problems. The credit counseling session can come up with serious complications especially after you have filed for bankruptcy.
As you would know, the 60 day period after bankruptcy is very important and the lenders invariably file dispute charges against the borrower with in this time frame. If the credit counseling session does not go in your favor, you certainly are going to end up with complications on your hand.
Secondly, the means test introduced by the law means that you will have to satisfy the court that you do qualify for chapter seven. Merely your opinion that you are facing debt problems is not going to suffice. The opinion of the court and the satisfaction of the judiciary matters a lot. In such a scenario, there is a possibility that your planning for chapter seven bankruptcy may go waste as the law may order you to go in for a chapter thirteen bankruptcy.
Thirdly, nobody wants to let go of their assets. However, hiding the list of assets from the court in a bankruptcy proceeding can be very dangerous. There is a possibility that the individual may end up going to jail because the promise made to the court is made under oath and at the risk of punishment for perjury.
In such a scenario, a debt settlement deal which is nothing but a private contract between the lender and the borrower is a preferable option. Nobody wants to make the mistake of relying on the court and its excessively technical and cumbersome formalities when alternatives are present.
Finally, the increase in the settlement percentage for debt negotiation deals and the increase in the fees for bankruptcy because of the increase technicalities mean that the two options are no longer very different as far as the cost is concern.
This compared with the fact that the debt relief service providers can be easily allocated and, identified and employed on the World Wide Web means that the convenience factor always raise in favor of debt settlement. All these are the reasons why more and more people are going in for a settlement deal before they think of filing for bankruptcy.