Bankruptcy and Debt Elimination
At first glance, debt elimination programs and bankruptcy look similar in their scope, as both of them promise that a debtor can go through the process and walk away mostly debt free. As you look more closely, big differences become apparent between the two. Bankruptcy is a legal process for legitimate debt discharge, but debt elimination is largely a scam that is perpetrated on victims looking for an easy way out of their financial problems.
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Debt Elimination Background
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Debt elimination programs start with an organization that promises to provide a certificate that a debtor can take to a creditor and supposedly absolve the debtor of his financial responsibility toward the debt. The debt elimination people often say that the declaration of independence validates their process of debt elimination. They also question the authority of the Federal Reserve, or the legitimacy of the U.S. dollar. Debt elimination companies also provide references to judicial decisions and other documents that they claim support their case. Debt elimination companies often charge between $2,500 and $3,000 plus a percentage of all of the debt of the client.
Bankruptcy Background
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Bankruptcy, unlike debt elimination, is mentioned in one of the founding documents of the U.S. government, the Constitution. It is designed to be an orderly process through which a deserving debtor can get a chance at a fresh start without the encumbrances of debt. The law has been amended throughout the history of the United States, but remains largely intact today. A Chapter 7 bankruptcy will cost around $1,500, with a Chapter 13 costing a bit more.
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Success Rate - Debt Elimination
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Most people who try the debt elimination route to eliminate their debts find out that the system does not work at all. In fact, if you try this, you could be committing fraud. The Federal Reserve has issued a notification to its banks to confiscate any documents that borrowers present and send a suspicious activity report to the FBI. This is the same report that banks use to alert the FBI about potential terrorists and money launderers. In addition, you will probably be sued by your creditors when you do not pay your bills.
Success Rate - Bankruptcy
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Bankruptcy usually proceeds in an orderly fashion without incident. Occasionally, there may be a problem with a large purchase made immediately before filing, or some other issue, but if you are honest about your situation and meet the guidelines of the law, you will probably receive a discharge under federal bankruptcy code of eligible debt without incident. Once you receive this discharge, creditors cannot sue or pursue any type of collections activity against you. If they do not follow this order, they can face sanctions from the bankruptcy court.
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