Many people I speak with have tried debt settlement, only to find themselves being garnished by one of their creditors because that particular creditor decided it wanted more money than what it was receiving through the settlement. The core problem with debt settlement is that one’s creditors do not bind themselves to any sort of arrangement. So, a person who is going through debt settlement is still at risk of garnishment and property loss. Bankruptcy is the opposite: it precludes any actions against your wages or property. In addition, many times, debt settlement costs more than a bankruptcy and its effects on credit is similar or worse than bankruptcy. Other issues include:
1. Debt settlement programs last about four or five years.
2. Even if a significant portion of your debt is settled, the rest will likely grow larger, leaving you with more debt than you had to begin with.
3. While debt settlement may seem like a good way to get out of debt, ruined credit, lawsuits, tax liability, and continued growth of debt are all factors that can leave debt settlement customers worse off than they were before.