{"id":716,"date":"2019-04-19T06:53:20","date_gmt":"2019-04-19T06:53:20","guid":{"rendered":"https:\/\/recoverylawgroup.com\/?p=716"},"modified":"2025-08-11T04:29:46","modified_gmt":"2025-08-11T04:29:46","slug":"difference-between-bankruptcy-debt-settlement","status":"publish","type":"post","link":"https:\/\/recoverylawgroup.com\/staging_D\/difference-between-bankruptcy-debt-settlement\/","title":{"rendered":"Is There a Difference Between Bankruptcy & Debt Settlement?"},"content":{"rendered":"

A stroke of misfortune or sheer bad luck with monetary investments may result in severe financial problems for people. If you too are struggling through insoluble debts, you are faced with 2 choices as per Sacramento based law firm Recovery Law Group<\/a> – filing for bankruptcy or opting for debt settlement. However, to become financially stable again, you need to choose between the 2 options available to you. Though many people are aware of bankruptcy, not much is known about debt settlement. It is important for debtors to understand the difference between the two, for them to choose the best option for themselves.<\/p>\n

What is Debt Settlement?<\/strong><\/p>\n

An attorney or debt settlement company helps resolve a debt obligation in a debt settlement process. During the debt settlement process, negotiations are carried out with creditors with respect to getting discounts for the debtor when the latter has defaulted on making payments. Any unsecured debt including medical bills, credit card debts, etc. can be negotiated through this program, however, taxes, any government-backed loans or student loan debts are not eligible to be covered in this settlement. Any debtor who opts for this process should have a large sum of money to clear the settlement payment in a relatively short time frame. Through debt settlement, a debtor can protect all assets, get a quick resolution to their financial problems when the creditor accepts the debt settlement amount.<\/p>\n

Difference between Debt Settlement and Bankruptcy<\/strong><\/p>\n

Debts incurred by any individual or organization can be classified as secured or unsecured. The most commonly used chapters of bankruptcy for consumers are Chapter 13 and Chapter 7. Through these chapters, consumers can reorganize their debts and pay off portions of their debt via a repayment plan or get a discharge on most of their debts respectively. However, certain loans such as tax debts, student loans, and some other secured debts cannot be discharged through bankruptcy.<\/p>\n

Which is a Better Option?<\/strong><\/p>\n

Often people are confused between the 2 options available to get their debts discharged. However, it is found that between debt settlement<\/a> and bankruptcy, the latter usually offers a better solution for most people. This can be attributed to the fact that:<\/p>\n