Are you in debt? Is your business going down? Don’t be afraid, you are not alone. Consumers are in debt all around the world. This is a worldwide phenomenon. This can be caused due to unemployment, global pandemic, anything else. In your effort to save yourself from debt, you normally have two choices. One seems the easy one, is to file bankruptcy. So, you will be financially relieved and can start fresh.
Another option is a debt relief plan. Debt Relief Plan is also known as DRP Debt Soothing. It is a plan designed to ease the debt burden on the debtor. It is the process for partially or totally forgiving the debt. In most of the cases, it is the process of slowing down the money ratio. The debtor agrees to pay a small fixed amount of money to the creditor.
Debt Relief and bankruptcy are mutually tough choices to have. I want it to make clear that DRP Debt soothing or Debt Relief Plan contains multiple significant risks. But, it will help in the long term to carry on your business and maintain your reputation. On the other hand, Bankruptcy is a process that is only thought of by debtors that are too tired of trying and have no other options.
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How debt relief plan can help you:
- Renegotiate the monthly repayments and terms of your unsecured debt repayments. Without incurring any fees or charges
- Combine these repayments and pay them as a single monthly installment
- Avoid action from collection agents, wage garnishments, or legal actions
- Avoid bankruptcy and its inherent problems for debtors. Such as the inability to get credit in the future, travel restrictions, etc.
- Back on track towards financial stability. Build a positive future credit track record.
Which costs more?
If you have around $5,000, debt relief or DRP debt soothing could occasionally be the smartest and inexpensive option. Because in this case you simply cannot qualify for bankruptcy. However, the least expensive option will vary from case to case. If you are in debt, lets estimate which option can be more beneficial for you.
- Debt relief and DRP Debt Soothing: You have to pay around 65% to 90% of the whole charge of your debt after considering dues, taxes and interest.
- Section 7 bankruptcy. Assume to pay somewhere from $500 to $4,000 in lawful fees, plus a $335 filing charge, that can be ignored if your revenue is 150% below the poverty mark
- Section 13 bankruptcy. Expect to pay somewhere from $1,500 to $6,500 in legal fees, plus a $310 filing fee.
Let’s have comparison between DRP Debt Soothing and Filing Bankruptcy
| DRP Debt Relief | Bankruptcy Chapter 7 | Bankruptcy Chapter 13 | |
| Estimated Charge | 20% of debt + taxes | Without attorney: around $300
With attorney: $800 to $4000 |
Without attorney: around $300
With attorney: $1,500 to $6,500 |
| Stress on Credit | Stays on credit report for 7 years, temporarily lowers score | Stays on credit report for 10 years, temporarily lowers score | Stays on credit report for 7 years, temporarily lowers score |
| Procedure Span | 2 to 4 years | 3 to 6 months | 3 to 5 years |
| Estimated Accomplishment Ratio | 10% | 95% | 55% |
| Can I keep property? | Yes | No | Yes |
Why is it difficult to file bankruptcy?
Bankruptcy seems to be an easy way out. If you are in great debt and you are unable to meet the requirements of creditors. Then, simply file bankruptcy. Start new and fresh. This seems to be a good idea but the reality is not as easy as it looks. You cannot file bankruptcy that easily.
If your assets value is so low, then bankruptcy will be acceptable to you. Filing bankruptcy is a long and grueling process. Filing bankruptcy needs bankruptcy lawyers. Their charges are high and it takes a lot of time to process it. After you are declared bankrupt, then you cannot apply for credit for a long period of time. Your reputation goes down and cannot start a new business right away.
Conclusion
Debt Relief or DRP Debt Soothing and Bankruptcy are mutual approaches that you can use to handle devastating debt. When you file for bankruptcy, you appeal a court to release you of partial or all your debt. You might need to sell your properties or follow a refund plan before a court releases your debt. Bankruptcy will not clear every type of debt but is valuable for paying away unsecured debt. Your credit value will drop to none significantly after bankruptcy.
“Debt relief” and “DRP Debt Soothing” is a procedure that covers several approaches to undertaking debt. Credit analysis, debt merging, debt soothing and debt settlement are all cases of debt relief. Your credit value might or might not reduce after debt relief. It depends on the process you choose. Debt relief plans can be a superior technique of paying the debt if you have sufficient revenue to repay your expenses. Bankruptcy might be an effective choice if you have a devastating quantity of debt and slight revenue.
