Bankruptcy is certainly one of the most heart-wrenching prospects one would ever consider. There has been a spate of bankruptcy now, but it is hard to imagine how tough or how socially and financially inept it made people look. But all said and done, it is financially and psychologically debilitating, and the whole blow can be pretty tough to overcome. So, if you're on the edge of the bankruptcy precipice, you might want to consider a little bit of information on debt settlement and whether it is better when compared with bankruptcy. Bankruptcy or Debt Settlement The similarity is that they are both very difficult words especially for those who are in such a financial situation. But subtle differences need to be made so that you can take an informed decision in choosing between the two. Bankruptcy Simple and straight, a bankruptcy will wipe out all your assets. It is one of those rip-your-heart-out situations, where all your assets are seized and then auctioned off. You sit in the room watching the proceedings, the proceeds of which you will never get. During the process, most of the time your assets will almost never receive their true value, and they are likely to be sold off at knocked down prices as if it's an off-season sale. However, it all depends upon the value of your assets and the amount of debt. One advantage is that, your debt will be eliminated once and for all and you will never have to worry about it again. But then, after bankruptcy you will worry about getting a job (recruiters rarely warm up to someone who's been through bankruptcy), hitching your credit score back to respectable levels, and not receiving any financing till then. You will have to care about getting a new house, having to use public transportation till you can buy a new vehicle, and the unmentionable social stigma and look-down-upon treatment which you are likely to receive from your friends, relatives, and the people you know. Hence, you need to consider all the alternatives available to you, before making a decision. Debt Settlement If this option is really feasible, you ought to consider it very seriously. In debt settlement, your creditors will give you some time to prepare a detailed report about your finances. And based on that, they will decide whether to allow you some time to sort out your debt. Simply put, if you think your existing sources of income, salary, investment earnings, etc., are good enough to cover the debt and the debt payments, then debt settlement should be considered. You will have to calculate all the inflows and the outflows and then give your creditors a certain time frame in which you intend to pay off all your debts. It may look severely complicated and a long procedure with unthinkable twists and turns, and yet, somehow, it is most certainly a better option than bankruptcy. The reason for this is because, debt settlement allows you to keep your assets, unless you have to sell them to cover your debts. But still, it allows you to pick and choose which assets you don't mind giving up. Besides, a successful debt settlement is a win-win situation both for you and your creditors. For you, because you retain assets, credit score and the social status, and for creditors because they get a lot more money than they would get, should you file for bankruptcy. The creditors still stand to gain more than what they would out of your bankruptcy. In conclusion, if possible, choose debt settlement over bankruptcy. A word of advice: there are a lot of fraud debt counselors and debt settlement people who are out to rip you off. So be careful and make sure you get debt counseling from someone with a good record.