debt consolidation

Deciding Between Bankruptcy and Debt Consolidation

It can be challenging to decide whether bankruptcy or debt consolidation is the best decision. While it might seem strange, some people decide to take out a loan at a lower interest rate to repay another amount of money. Other people decide to declare bankruptcy, which has its own attractions and challenges. These options frequently involve a person either discharging debt through Chapter 7 bankruptcy or creating a payment plan through Chapter 13 bankruptcy. In deciding which option is best, it is a wise idea to speak with an experienced attorney. Debt Consolidation as an Option Debt consolidation allows a person some significant advantages. One of the advantages of debt consolidation is that a person makes one payment to one lender rather than juggles the demands of various lenders. Some people are even able to obtain debt consolidation with low interest rates below 10%, which makes it much easier to manage debt. Another debt consolidation perk is that a person is often able to establish an end date at which he or she will be finished repaying a debt. Despite these advantages, there are some recognized setbacks to the option of debt consolidation. For one, a person needs a good [...]

2018-08-09T15:18:47+00:00Tags: , , |

The Difference Between Debt Consolidation and Bankruptcy

While many people are familiar with the bankruptcy process, debt consolidation is also a unique process. Debt consolidation involves combining debts into one, more manageable debt. Not only does debt consolidation simplify the repayment process for individuals, it also reduces monthly payment and interest rates. Many individuals confuse debt consolidation with debt settlement, which involves a person paying an amount lower than the total amount that is owed. Bankruptcy, however, follows a distinct process from debt consolidation. In Chapter 7 bankruptcy a person sells property to creditors to pay off debts, while in Chapter 13 bankruptcy a repayment or reorganization will be arranged with creditors. Deciding on bankruptcy or debt consolidation depends on a person’s financial goals. Advantages to Filing for Bankruptcy One of the largest advantages of filing bankruptcy is that it offers greater protection against creditors because an “automatic stay” is placed that prevents creditors from obtaining money. An automatic stay also prevents foreclosure, repossession, and shutting off utilities due to nonpayment. Bankruptcy also offers the advantage of clearing a person’s debts, which means that the process lifts financial difficulties from a person. After eliminating these debts, a person can then begin to rebuild their credit and move [...]