Are you currently dealing with more debt than you can handle, and you're not sure what to do about it? If so, there are a few ways that you can handle it, such as debt settlement and bankruptcy. Here is what you need to know about these two ways to help get your finance back in order.

Debt Settlement 

It's important to understand how debt settlement actually works. It's a way of negotiating with your creditors to have a portion of your debt forgiven. This is done by providing the creditors with one large sum of money in order to have the debt eliminated. The advantage of the debtor is that you will not have to pay back the debt in full, and the advantage to the creditor is that they will receive some money rather than potentially nothing at all. 

Debt settlement does have its problems though. If you are not considered insolvent, then you may have to pay taxes on the amount of debt that is forgiven. It is viewed as income that you need to pay taxes on. It can also take quite a bit of time to find people that are willing to purchase the debt that you owe. In addition, you'll continue to owe interest on the debt that you still owe, which can continue to add up. 

Bankruptcy

Bankruptcy can be a more efficient and less expensive way to discharge debts. There are methods that allow you to discharge unsecured debts, such as medical bills and credit card balances, by using Chapter 7 bankruptcy. It will take a hard hit on your credit and take time to recover, but it can completely eliminate many unsecured debts that you have. 

Chapter 13 bankruptcy works as a repayment plan where your debts are not completely discharged. It is determined how much you can afford to pay toward your debts each month based on your income. You will then be required to make a monthly payment toward your debts for a specific period of time. If you fulfill your obligations of the repayment plan, the remainder of the debts will be forgiven. This form of bankruptcy doesn't affect your credit as much, but it does cost more money due to the repayment plan.

Does bankruptcy sound like a better choice for you? Reach out to a bankruptcy lawyer in your area. They'll be able to help you throughout the entire process to ensure it's done right. 

Read more about how a bankruptcy attorney can help you.