The biggest difference between debt settlement and bankruptcy is the court’s involvement. In bankruptcy, the bankruptcy laws and the court dictate what you’ll pay back to your creditors and can exercise control over your financial well-being for as many as five years. In addition, in some Chapter 13 bankruptcy cases, you might actually pay back more than what you owe. With debt settlement the courts are not involved. Your attorney will negotiate a reduced payoff directly with your creditors. Generally speaking, if your debt load is low, or if you do not qualify for a simple Chapter 7 bankruptcy, it makes more sense to explore the debt settlement option. In most cases, PandA debt settlement clients pay back about half of what they owe.
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