Bankruptcy has been a monopolist decision mainly during the time of recession.
People had to opt for the same as at that time there was hardly any other alternative with which they could come out of their indebted situation.
As millions were suffering from the same crisis and taking similar decisions of non-payment, banks and others financial institutions were facing enormous difficulties.
Following the absolute crisis of financial setbacks, finally the federal government had to come up with several amendments whereby the debt settlement programs got recognized from the government.
The arrangement of settlement programs are not hampering like the earlier option of insolvency.
Here, the defaulter needed to pay back their dues but in a reduced amount and according to their capability.
You will easily understand which one is a better option between bankruptcy and settlement if you judge the advantages and disadvantages offered by both.
Here, starting with the settlement option, it is imperative to know that settlement option requires you to pay a part of your outstanding liabilities.
Here, the exemption of the amount would depend on your affordability and the nature of hardship.
If you can prove with documents that you are truly facing some unavoidable hardship for which you cannot pay off, you can expect a heavy exemption from the existing outstanding payables.
The debt settlement programs offer you the opportunity to negotiate with the lenders with help of a professional.
The consequences here are not as fatal as created by bankruptcy.
Once, after paying back to your lenders, you can relax and start your life afresh.
The worst disadvantage created by insolvency is that your bank status is absolutely affected.
Your lenders mark you as a defaulter and therefore your future financial aspects get totally hampered.
When you file for a non-payment, your creditors charge penalty for the same.
Many times when you fail to pay back absolutely, your lenders tend to seize your property too.
A condition of bankruptcy means being totally devastated and helpless.
Being a defaulter means that your financial activities will get stagnant for the next seven or ten years.
This is truly frustrating.
Therefore, unless you believe that you have resources with which you can survive even after a non-payment, you can then only apply for the same.
Otherwise, it always remains the last resort.