Ohio residents may believe that working with a debt settlement company is better than filing for bankruptcy. However, the impact to a person's credit score may be the same regardless of which option is chosen. In some cases, an individual could see his or her credit score fall into the 500s, which is generally considered fair or poor.
Debt collection companies may try to tell people that they will lose all of their property in a bankruptcy. The truth is that state and federal laws exempt certain types of property from being liquidated in a Chapter 7 case. Furthermore, debts may be discharged in as little as three months after filing. Another consideration debtors should make is that it may take years for debts to be settled when using the services of a companu. While negotiations are ongoing, it may be possible for creditors to file lawsuits or take other steps to get what they are owed.
Debt settlement may make sense for those who can only file for Chapter 13 bankruptcy. This is because the latter takes at least three years to complete the restructuring, and the period for a debt settlement might be less in some cases.
Filing for bankruptcy may make it possible to restructure payments or otherwise provide financial relief for those who need it. Those who file for Chapter 13 bankruptcy may see their unsecured debts discharged after making payments for three or five years. An attorney can explain the eligibility requirements for that chapter and assist with the preparation of the proposed repayment plan if a decision is made to go forward.