Debt settlement and bankruptcy, each has its own advantageous and disadvantageous. Before taking decision to choose one particular, it is very important to know about each option and how one differs from other.

The main difference between debt settlement and bankruptcy is that, debt settlement is an agreement between you and lender that is taken care of out the court steps whereas the bankruptcy is legal procedure that is taken care of attorney inside the court steps to discharge liability.


If bankruptcy is filled perfectly and one who files qualifies for it, the court can order or enforce the creditors to discharge the debt. In general there are two types of bankruptcies for consumer to file. They are chapter 7 and chapter 13.

Chapter 7 bankruptcy is to be filled when you want to eliminate debt and chapter 13 to restructure debt into a repayment plan based on how much the debtor can repay, not necessarily the whole amount the debtor owes. According to earlier laws of bankruptcies laws, a person who files bankruptcies will manage to discharge whole debt that he incurred till then but recent laws that amended do not allow to discharge some debts like student debt secured by federal government, taxes etc.

In addition, the bankruptcy filled will be reported to credit rating agencies and that will stay on your credit report for at least 10 years. Bankruptcy on your credit report will have negative impact on your credit score and as a result your future credit will be impacted.

On the other hand, debt settlement is a process that is carried out of court agreement made between debtor and creditor. The agreement is made for the benefit of both the debtor and creditor. With debt settlement, the debtor will not manage to discharge the debt as in case of bankruptcy instead a repayment plan that is in favour of all the creditors of debtor will be made. For debt consolidation to work, it requires that each and every creditor must agree to debt settlement and its repayment plan terms.

Debt settlement in the same way as bankruptcy will be reported to credit rating agencies. Debt settlement will remain on your credit report for 7 years. It is natural that credit score will be impacted in either of the option and if you are in such a position to opt either of the option, then you are already half way down of your credit score and at the same time with any option total debt will not be discharged.

Since the impact of debt relief options is much less than bankruptcy and they are easier for you to handle the procedure. Choosing the debt relief option enables the lender to get some amount from you instead of walking away will all the debt.

There are many terms associated with Payment Protection Insurance, such as Loan Protection Insurance and PPI among others. Basically, Payment Protection Insurance covers the policyholder if they become unable to work if they have been made redundant, have had an accident, or they have developed an illness. When looking at PPI policies, it is important to remember that they are all going to offer different positives and negatives as they are all different. The problem with this type of insurance is that it has paved the way for ppi claims. It is not uncommon for Payment Protection Insurance to be sold alongside a credit card or a loan. However, PPI can be purchased on it’s own for individuals who require it.

Mis-sold Payment Protection Insurance is a major problem with this type of policy. There are many reasons as to why this happens, most commonly because the customer does not understand what they are buying, or they did not know that they purchased the policy. Because of the many issues surrounding the sales of PPI, the Office of Fair Trading has opened an investigation.

Fortunately, there are many other points that make a good argument for the positive side of Payment Protection Insurance. One of these is that if you have a lot of debt that needs to be paid off then PPI could be that extra reassurance that you need. The great thing about PPI is that it offers reassurance in the form of protection is the policy older is unable to earn an income to pay off their debts due to health reasons. With a PPI policy you are only required to pay a certain amount of money each month to ensure that you are protected in the event of becoming unable to work.

There are, however, a few different things that need to be kept in mind when it comes to Payment Protection Insurance policies. One very important thing to remember is that there are many different PPI providers around, and they are all in competition with each other. This means that one provider may be able to offer you a much better deal than another, and one may have some benefits that another cannot offer you. This means that carefully considering all of the different Payment Protection Insurance providers around. This enables you to ensure that you are getting the best deal possible, and also makes sure that you are not being mis-sold PPI. If you have been mis-sold PPI then you can claim back ppi by using a claims company.

Usually, a PPI policy will cover small repayments of the existing arrears for a certain amount of time, by which it is common for the policy holder to be back at work. If the policyholder still has no solid income after the period of time that the PPI covers then it is up to them to find another way of paying off the remainder of their debts. One thing that can be stated about PPI as a fact, is that it is not a policy for everyone. Situations differ greatly, and whilst PPI may be suitable for some people, it might not be the right policy for others.

As with most types of insurance, there are more than one types of PPI to choose from. It is important to consider all options when thinking about PPI. There are a few different things that should be considered when choosing a Payment Protection Insurance policy. Checking with an employer to see if there is already some sort of PPI policy in place would be a good idea to ensure that no money is wasted. When considering PPI it is important to remember that there are many providers competing in the market.

There has been much controversy surrounding the sale of Payment Protection Insurance. There has been so much trouble associated with PPI that it has come under the investigation of the Office of Fair Trading. The main reason behind this is that PPI is often mis-sold, however, this does not mean that all PPI is mis-sold, it just means that research is required to make sure that the policy is right for you. With Payment Protection Insurance, there are advantages and disadvantages, much the same with all types of insurance. As long as a policyholder carefully looks into all of their options then they will be able to decide if Payment Protection Insurance is right for them.

If you do ask them, they might. If they can see that you really can’t keep up with the payments you agreed to, they might decide that the best way of getting their money back is to accept smaller payments, so you can repay what you owe (even if more slowly than expected). That doesn’t mean they will, but they might.

So – how can you improve your chances of negotiating successfully with them? A good way of starting is to get some debt advice from a professional who’s dealt with lenders – and borrowers – many times before.

They can show you, for example, how to draw up a ‘Statement of Affairs’ so you know exactly where you stand with your finances: how much you earn, how much you spend, how much you can afford to put towards your debts every month, etc.

There’s no point just getting in touch with lenders and telling them you can’t afford the payments – they’ll need to know what you can afford to pay.

If you get some debt advice, you’ll also find out how you should propose to split the available money between your different lenders. This would be done ‘pro rata’ – you’d offer each lender a portion of the available money in relation to how much you owe them.

If you have three lenders and owe them £5,000, £4,000 and £3,000, that makes £12,000. Say you can afford £120 per month (just to keep it simple), you should offer them £50, £40 and £30 respectively. That way, they’d all see (a) that you’re paying as much as you can each month, and (b) that you’re proposing to split that money fairly between your creditors – don’t be tempted to pay more to the one who ’shouts the loudest’, because that wouldn’t be fair on the others.

Today debt issues have become a part of everyone’s life. Thousands of Americans are going into debt on a daily basis. Paying back multiple debts gets them into more and more of rising debts. It has become a national headache that millions of amounts of people are in debt today. But now you can try to solve such debt issues by the help of debt consolidation loans. As the name suggests debt consolidation loans are solely meant to overcome the debts in your life. Debt consolidation loans are the primary solution to get rid of your debts. But you should also be aware of the various risks of debt consolidation loans. Here I have discussed some major risks and how to avoid them to get a debt free life.


Debt consolidation loan allows your multiple debts into a single debt and pay off with a new loan amount. Many such loans lower the monthly payments by extending the loan repayment time, but the new loan’s interest rates remain unchanged as compared to the old interest rates. So if you calculate properly, you will find that you are paying more interest rates and making more monthly repayments than your previous loan amounts. You can avoid such a situation by selecting a proper loan package taking the help of a financial advisor in your city.

You can choose a loan where the interest rates are low enough and the monthly repayments are also reasonable enough so that you can easily afford them. You should also avoid taking the maximum repayment time, as you end up paying huge sums of money before you are free from debt. Many people again go into a debt by paying debt consolidation loans. This is because with the high interest rates and more monthly repayments. Also people think that they are getting free from debt and start their expenses again in their same pace as done before to bring them into debts. You should be quiet conservative about this and prevent your expenses unless and until the debts are paid off in full.

Debt consolidation loans help you get rid of your debt issues. If you find that the interest rates are high and the monthly repayments are more enough beyond your affordability, you can always choose the lower interest rates loan package. Know about the different debt consolidation loans package from your financial advisor before deciding which suits you best to pay off. And it is always advisable that while paying off the debt consolidation loan keep a control over your expenses as they can bring you into further debts in your personal life.

Ignoring the problem is not the solution to the problem instead start acting on them because the longer you ignore the problem, the worse the situation becomes. If you keep ignoring the debt, then the debt start incurring at faster pace because the creditor add penalties such as late fee and increase interest rates over the outstanding debt.

This might be the difficult situation and many creditors may not be willing to work with you but putting consistent efforts towards clearing the debt will pay you at the later stage of settling the debt. If you are in such kind of situation, then you are at the right place as in this article I concentrate on how to deal with creditors when borrower is facing real difficulty towards paying off the debt.

First, before you try to speak with your creditors, sit down and make a list of how much comes in and how much and what way it goes out. To start with make a list of everything that you owe. While making a list, sort out what exactly you owe and how much you owe to each creditor. Next put all this debt concerning priority. Priority should in this way: mortgage payments, secured loans, rent, council tax, necessities, taxes and unsecured debts. The least importance should go to unsecured debts.

Next, start working out with personal budget. This budget can be for weekly or monthly that tells you how much exactly you need to live on. The budget you come up with must be realistic and honest. The budget you derive will show how much money you can commit to pay off your debts. While outlining the budget, it will also show how and where you can save money.

Second, after you come up with budget for necessities, see if you are left with any money to pay off the debt. See if the amount you are left with after paying for necessities and amount you require to pay off the monthly payments is equal or higher then your finance is under control. If the situation is, reverse then you are in trouble.

If you cannot pay off the monthly bills with amount left after paying for necessities then you should contact your creditors and explain situation. See if your creditor agrees to lower your monthly payments, consolidate, or reduce the debt or lower interest rates so that you can meet with payments without any stress.

Meantime, you must bring the finance on track as quickly as possible. Try to work for some extra hours or find out part time job to make some extra money that you need to cover payments.

If you are unable to cover all payments then you must make sure to pay full payments on your mortgage, even if you are unable to pay for credit cards you do not lose your home. Then talk to your lenders and try to reduce the payments over debt in such a way you meet all monthly payments.  You may consider a debt consolidation program offered by a Credit Counseling firm.

During the past couple of years it has become common for every person to take home loan and buy a property either it for primary residence purpose or investment purpose. However the scenario has changed with downfall in economy and rise in unemployment rate, many people are now unable to pay for the mortgages that were taken during the booming economy.

Now the main goal of the homeowners who have taken mortgage is to save the home from foreclosure. If you are unable to pay the mortgage debt, you are not only risking your home but also the credit rating is at risk. A debt consolidation loan is not an option when there is no equity.

The challenge to save the home from foreclosure is even harder for those who are unemployed that do not have steady income to pay off the mortgage every month on time. If your loan is in default, the lender will take the possession of your home and the investment that you made till date will go in vein.


There are some occasions where you can afford to stop making payments without risking your home to foreclosure. Here is how:

There are many homeowners who already took second and third mortgage, home equity loan. In such situation even if the lender forecloses your home hardly he cannot recover any amount other than incurring foreclosure expenses. In that situation, you can stop making payments if you are having trouble meeting mortgage payments every month.

Here you continue to make payments or reduced payments on the main loan and stopping payments to rest of the debt prevailing on that home. Often, you first mortgage will be the main loan on your home that require keeping current to avoid foreclosure.

Doing this way of stopping payments to loans your home secured that should be considered as a last resort and if you do not risk your home to foreclosure. This process leaves the homeowner with more money that allows paying the one or more lenders who could foreclose your house.

This situation arose during the last five to ten years, the banks started to give the home loans without having enough equity in the homes that are secured for loan. The main intention of banks behind doing this with the expectation that property values would raise fast enough that can manage to provide adequate security for the home loans that kept the home as a security.

This situation has reversed due to economic slowdown in the recent couple of years. With slowdown in economy, many people have lost their job and unable to keep up with payments regularly every month and resulted in real estate market crash. With real estate market crash, home values reversed making new lows, erasing whatever equity that is there at the time of loans taken.

This has given a way for the homeowners possessing an unsecured home loan (when there is no equity to cover the loan) making the lenders unable to sue you if of default and foreclose.

Debt Settlement is a process where the creditor and debtor both agree on a reduced amount as the payment in full of the due debt. A creditor will not agree for a debt settlement as long as the minimum monthly payment is being made by the debtor. If the debtor cannot make the minimum monthly payments and the due amount is increasing because of the late fees and interests, then the debtor may try for the debt settlement.

The borrower can try to negotiate with a creditor on his own with the help of a lawyer or he can take help of any debt settlement company. The debt settlement company will charge the borrower a certain amount of money as their fees but these companies are very helpful. So the borrower can seek debt help from any company. After the debt settlement the borrower can pay off the debt with affordable monthly payments.

Debt settlement can be done on unsecured debts like credit card debts, personal loans etc. So with credit card debt you can enjoy credit card debt reduction through debt settlement. Thus the debtors can actually save thousands of Dollars. There are many companies out there in the market but it is better to choose a reputed and trusted debt settlement company. Wish a happy debt free life.

What is an IVA, and how does it work?

An IVA is a legally binding agreement between you and your unsecured creditors in which you will be expected to make regular reduced monthly payments to your IP (Insolvency Practitioner) for, in most cases, 5 years.

Before you enter into an IVA, you will have to speak to a debt adviser to discuss your situation. If they are sure that an IVA is the most suitable way for you to repay your debts, you’ll talk to an IP, who will work along side you to draw up an IVA Proposal – which will be sent to your creditors. This will include details such as, how you aim to repay your debts and how much money each creditor will receive if the agreement goes ahead.

So how is an IVA approved?

In order for an IVA to begin, voting creditors who collectively ‘own’ 75% or more of your overall debt have to agree to the terms laid down in your IVA Proposal.

What happens when it is approved?

If your unsecured creditors approve of the IVA, then you will start making regular reduced monthly payments to your Insolvency Practitioner – who will subsequently share money amongst your creditors according to how much you owe each of them (this is called a pro rata payment).

How long will my payments last for?

In most cases, you will make payments to your IP for 5 years. However, this may vary depending on the terms of the agreement and whether you miss any payments during it.

Assuming your IVA comes to successful conclusion, any remaining unsecured debt will be written off.

Are there any drawbacks?

If you are a homeowner, you may be required to release some of the equity in your property during the final year of the IVA – this will be used to pay off more of your debt. Also, entering an IVA will show up on your credit report – which will affect the availability and/or cost of credit for 6 years from the time it starts.

A note…

It is important to note that before entering into any debt solution, you should discuss your options with a professional debt adviser. They will be able to discuss your situation with you and help you decide on the best course of action. You may find that an alternative debt solution, such as a debt management plan, is more appropriate for someone in your situation.

Bill consolidation is a process through which you can transfer all your outstanding bills and debts into one Bill consolidation loan. As we all know that most of us use credit card excessively. Most of us use 10 to 12 credit cards but it is really difficult to manage such a huge debt when you use 10 to 12 credit cards. It is very well known to us that the interest rate of credit card debts are usually mush higher. So when you cannot manage those debts , it is better to consolidate bills and consolidate credit debt.

the interest rate of the bill consolidation loan should be much lower comparatively and as all of your bills will be turn into one bill consolidation loan, it will also help you to manage the payments and only a single monthly payment will take care of it but you should be careful that you are making the monthly payment after the bill consolidation. Otherwise it can have worse effect on your credit score and credit report.

Bill consolidation will also help you to improve your credit score as soon as you start making payments. Bill consolidation has a bit of negative effect on your credit but as it is already said that as you start making payments your credit score will start improving. There are many institutes in the market who are offering bill consolidation. But you should choose the company wisely. You can go for it of research on internet to find the best company available. If any of your friends or relative has gone through the process before, then you can also take suggestions from them.

When you are searching for a Bill consolidation company then you should better go for a company who are actually specialist on Debt consolidation. The companies who are providing various types of services are not usually very helpful.