This is the second in a series regarding Bankruptcy vs Debt Consolidation. It is not an easy decision on which course of action to take, so I have compiled pros and cons to better guide you and to help you understand the ramifications as it relates to credit repair.
Another process sought after by those in a deep debt is filing for a bankruptcy. This is a process where usually all your debts are discharged, meaning they are no longer obligations and you are given a fresh start.
There are two types:
Chapter 7 bankruptcy: This method of debt relief works by liquidating majority of your non-exempt assets - you will have to check with your state for the particulars of what these assets are - to pay your creditors. Any remaining obligations are usually discharged.
Chapter 13 bankruptcy: Chapter 13 is similar to a debt consolidation only that it is a court supervised process. It reduces the amount of your financial obligations and makes you follow a repayment plan for about 3-5 years after which your debt will be discharged.
Pitting debt consolidation vs. bankruptcy between each other we can see that neither of them is by any means an easy choice. The best choice for you is dependent on your present financial situation. So it would be wise to explore your options thoroughly before making the choice between the two.
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