Debt Consolidation vs Bankruptcy
Understand Your Options - Part 1
This is the first in a series of debt consolidation vs bankruptcy. When
we compare them with each other we can see that, each have their own
pros and cons, though at face value debt consolidation may seem like a
These are two options which most
people consider when they face a financial difficulty. Their ultimate
aim is to be free of debts, but most people are not sure as to which
process to choose to be free of their debts. So have a look at debt
consolidation vs bankruptcy before making your choice.
Debt Consolidation: It basically means that you sum
up all your debts into a single debt and work off in paying that one
debt through monthly payments. This can be done in two different ways:
method is that you can apply for a debt consolidation loan and pay off
all your creditors, and then make monthly payment to repay that loan.
- Another method is let your debt consolidation company to negotiate with your creditors and accept on an amount that can be paid on a monthly basis for a specified number of years.
- In debt consolidation vs bankruptcy the main advantage of debt consolidation is that your credit does not get affected much and also it is rather easy to build your credit once you are discharged.
just have to sign a single check a month and there is no trouble of any
paper work involved, as the debt consolidation company takes care of
- The interest rates for your debts will be considerably lowered and also any late charges can be cancelled.
and programs in this arena are usually very confidential, so no details
are given to your employer, though it appears on your credit report.
- In the pitting of debt consolidation vs bankruptcy the following two are the most disadvantageous for debt consolidation.
is similar to a mortgage and has to be paid on a monthly basis. So if
you lose your source of income you might have to apply for a bankruptcy.
you have applied to have your obligations pooled together and are
paying your accounts, some impatient creditors can still sue you for
- You may want to check into credit repair after you get things settled.
Other cons include:
- Does not apply to any secured loans.
consolidating loan is usually a secured loan obtained by placing your
properties as collateral. So it places your property at risk.
some cases, though the payment is lowered with time you might still
have to pay the more amounts in interest in the same period.
Go To Part 2 Bankruptcy vs Debt Consolidation
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