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Bankruptcy may be the better way to eliminate consumer debts

Debt settlement in Arkansas and elsewhere means that a consumer enters an agreement with a creditor to pay off a loan, often a credit card account, for less than what is owed. As such, debt settlement is the virtual end of the line for the account. This option occurs usually after a default and when the creditor knows that there is little likelihood of the account ever being paid in full. The consumer typically has the option to choose the debt settlement or the bankruptcy option. 

A debt settlement is usually handled on one's own or through the services of a debt settlement attorney. If bankruptcy is also an option, counsel can discuss and evaluate all options with the consumer. An experienced consumer bankruptcy attorney is also experienced in negotiating with creditors and handling debt settlements.  

Many believe that the debt settlement option should be considered only if a person is not a candidate for a Chapter 7 bankruptcy. In fact, bankruptcy will quickly eliminate all credit card and other unsecured debt, saving the filer considerable time and money.  In debt settlement, the creditor pressures the debtor to pay the total of the reduced amount in a relatively short time. Because the debtor's credit score is already damaged, there is likely no benefit to paying hard-earned money to pay a festering bad debt.

The best alternative for those facing these issues in Arkansas is to file bankruptcy and discharge the unsecured credit cards and medical bills in one fell swoop, without having to negotiate from a position of weakness. The bankruptcy, approved within a few months, allows for a head start in improving one's credit. Languishing in one or more debt settlements could prolong the outcome for a long time, thus putting off the effort to get one's credit under control once and for all.

Source: nerdwallet.com, "How Does Debt Settlement Work?", Bev O'Shea, Feb. 26, 2016

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