Your bills have piled up and have not been paid for several months. The bill collectors have started to call. You’ve thought about trying to consolidate some of your debt but it’s just too expensive. There wouldn’t be any money left over in your budget for basic necessities like rent and food. You’ve narrowed it down to either bankruptcy, which you have heard of but never really explored, or debt settlement, which sounds attractive, but all the details haven’t been uncovered. A tight budget and savings accumulated will play a major role in whether it’s more affordable to go forward with bankruptcy or debt settlement. Each process has it’s own potential pitfalls and benefits. It’s up to you to decide what’s best for your budget. Read on to learn more about the different costs associated with each plan of action.

We are currently living in a rough economic time period. The present recession has thousands of hard working people failing to live up to their end of the bargain their creditors. Many are finding themselves falling behind in their payments to creditors. A loss of employment, death, hospitalization, and divorce are some of the leading reasons why thousands of people are dealing with a personal financial crisis. These unfortunate individuals are presently implementing different measures that can help them get back on their feet.

Having to deal with credit card debt amid the backdrop of an economy in ruins can be extremely stressful. Americans have become accustomed to buying on impulse. It’s those impulsive purchases that have manifested themselves in extremely high personal debt loads. The numbers are startling. According to CreditCards.com, “the average credit card debt per household with credit card debt is $15,788.00.” Given the current state of the economy, trying to pay off these debts without touching one’s savings is becoming more and more difficult. Conventional wisdom once stated that one should immediately use savings to pay off as much debt as possible. The reason being was that the interest rates on savings accounts and investments are often trumped by the interest rates charged on outstanding credit card balances. Any amount earned in interest with savings investments was easily taken away by the credit card’s higher interest rates. With some credit card interest rates anywhere from 18% to 28% or more, this was a valued argument. However, not using one’s savings account to pay down debt is perhaps a better approach given our current situation. After all, there are a number of extremely important reasons to leave savings accounts alone. In fact, it’s best to continue to save as much as possible and manage credit card debt at the same time. How is this done?

Going through a bankruptcy can be a stressful and draining process. However, sometimes filing for bankruptcy is the best option that a consumer has to help them fix their financial situation. While bankruptcy affects one’s credit, it also helps to clear the slate, so that a consumer may begin to rebuild their credit. Fortunately, there are a number of steps that can be taken to begin rebuilding credit and permanently repair a frustrating financial situation.

If your debts are keeping you awake at night. If you dread answering the telephone because you worry that a collection agency might be calling. If you avoid your mailbox because your kitchen table is already piled with “past-due” notices, debt settlement might be the choice for you.