Debt settlement is negotiating directly or indirectly with creditors about reducing debt up to 40-70 percent of actual debt amount. If debtor negotiates directly with his creditors he can convince them to reduce 45 percent of total debt amount but if he hires any professional for his help who is specialized in the relevant field, creditors can reduce up to 50-60 percent of total principal amount that debtor can pay easily as compare to total debt amount. After he starts taking help from debt settlement agency harassment by creditors is also reduced because they then communicates directly to that agency instead of calling to consumer. In this case debtor gets relief from his debt in 2-3 years. Though he needs to pay some amount of debt and also fees of debt settlement agency from which he is taking help to get out of his problem but once his debt issue is settled his credit report can be improved and he can also take loan or debt in future.

In contrast to debt settlement in bankruptcy debtor is not able to pay debt amount and also can not take help from any debt settlement agency he declares himself as a bankrupt. The consequences of this declaration can be bad for him for example his reputation is badly injured, he is declared as black listed debtor and potential bad debtor. This also leaves bad impact on his credit report scores and he will have to face a lot of problems if he will try to take loan or debt in future because any lender before giving loan sees previous credit history of debtor if it is not good he hesitates to give loan to that person.

Any bankrupt Person will also face problems in getting some good job, in getting place to live and in insurance. Bankruptcy leaves its impact on debtor’s credit worthiness for next 10 years
So if we compare debt settlement versus bankruptcy one important thing to mention here is debt settlement record is not included in public record but debtor bankruptcy is included in public record.

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