When facing financial Troubles, loan settlement and bankruptcy are two common solutions. These options can help you to repay your debt, but they work differently and have unique pros and cons.
What Is Loan Settlement?
In loan settlement, you talk to your creditors (sometimes with help from a loan settlement company) like settleup capital, to agree on a lower payment than what you owe. This approach can be a good option if you’re struggling to repay your debts but want to avoid the bad effects of bankruptcy. You might pay a portion of the debt all at once or over a short period, which could give you a fresh start without years of credit damage.
What Is Bankruptcy?
Bankruptcy is a legal process declaring you can’t repay your debts. In India Governed by the Insolvency and Bankruptcy Code (IBC) of 2016, This process helps people manage serious debt by either adjusting their payment plans or clearing the debt entirely.
Type of Bankruptcy Options in India
Under the IBC, individuals can choose insolvency proceedings to resolve their debts or seek relief from Creditors.
Insolvency Resolution Process: This option allows individuals to restructure their debt plan with the Help of a professional resolution. If creditors approve the repayment plan, individuals have a chance to pay off their debts.
Bankruptcy Order: If restructuring is not possible, individuals can appeal for bankruptcy, leading to a court order declaring their inability to pay. This process may confiscate your assets to settle your debts. After which any remaining unpaid debts may be discharged and offered a fresh start.
When to Consider Bankruptcy?
If you think you can pay a portion of your debt with some help, loan settlement might be a better way, especially if you want to protect your credit as much as possible. But if debt is simply too much to handle and creditors won’t stop calling, bankruptcy could offer the fresh start you need. Talking to a financial advisor can help you decide based on your situation and long-term plans.