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Automated debt relief is not illegal but it is highly controversial. Many people are unaware that there are different levels of debt relief. When a consumer files for Chapter 7 bankruptcy, all of the debt owed to creditors is discharged, or forgiven. When a consumer files for Chapter 13 bankruptcy, a portion of the debt owed to creditors will be discharged according to a repayment plan agreed upon by both sides.
Debt settlement on the other hand, does not require any court proceedings at all and no legal judgement is made in order for the settlement agreement to take place . A negotiated settlement must take place between the creditor and debtor which provides more flexibility than either Chapter 7 or Chapter 13 bankruptcy proceedings. When the debt is paid in full and when the amount owed equals or less than a negotiated set amount any outstanding debt will be forgiven. A negotiated settlement provides no protection to a consumer if the debtor is not able to make payments on time.
When filing for Chapter 7 bankruptcy, automatic debt relief occurs upon completion of the court proceedings. When a debtor files for Chapter 13 bankruptcy, most creditors do not agree to settle their claim with that person and will often file suit against them. Typically, creditors want more money than what was required in order for the settlement agreement to take place.
Debt settlement on the other hand, does not require any court proceedings at all and no legal judgement is made in order for the settlement agreement to take place . A negotiated settlement must take place between the creditor and debtor which provides more flexibility than either Chapter 7 or Chapter 13 bankruptcy proceedings. When the debt is paid in full and when the amount owed equals or less than a negotiated set amount any outstanding debt will be forgiven. A negotiated settlement provides no protection to a consumer if the debtor is not able to make payments on time.
When filing for Chapter 7 bankruptcy, automatic debt relief occurs upon completion of the court proceedings. When a debtor files for Chapter 13 bankruptcy, most creditors do not agree to settle their claim with that person and will often file suit against them. Typically, creditors want more money than what was required in order for the settlement agreement to take place.
