When you are considering filing for personal bankruptcy, it is important to understand the difference between settlement and closure. In this blog post, we will discuss the key differences between these two options and help you decide which is best for your situation.
Loan Settlement: A loan settlement is an agreement between you and your creditors to pay off a portion of your debt. This option is available if you are behind on your payments or if you have a high amount of debt compared to your income. A loan settlement will typically involve negotiating with your creditors to settle for less than the total amount you owe.
Closure: Closure is the process of formally dissolving your bankruptcy case. Closure is when you stop making payments and your creditors take legal action to collect the debt. This option is available if you are unable to make a loan settlement or if you do not want to negotiate with your creditors. When you choose closure, your creditors may file a lawsuit against you, and they may be able to take money from your paycheck or bank account to repay the debt.
Pros and cons of loan settlement:
-Settlement is typically less expensive and less time-consuming than bankruptcy.
-You can keep your assets, such as your home and car.
-Your creditors cannot come after you for the money if you fail to make a payment.
-You are responsible for making all of the payments under the settlement agreement.
-Your credit score will be affected for some time
Pros and cons of closure:
-You are discharged from all of your debt obligations.
-Your creditors cannot come after you for the money.
-You cannot keep any of your assets.
-If you have a job, you may have to disclose your bankruptcy on future job applications.
-Closure is more expensive and time-consuming than settlement.
Which option is best for you depends on your specific situation. If you are struggling to pay off your debts, settlement may be the best option. If you want to wipe your slate clean and start fresh, closure is the best option.
If you want to settle your loans, please give us a call. We can help you negotiate with your creditors and get a loan settlement that works for you.