BANKRUPTCY OR DEBT CONSOLIDATION – WHICH DEBT SETTLEMENT TACTIC WORKS BEST FOR YOU

Debt relief programs take different forms including Debt management program, Debt consolidation, Debt negotiation, Debt settlement and Bankruptcy. Now that the various alternatives are available, next step is to analyze and chose whichever suits you the best. We shall now compare Debt consolidation and Bankruptcy to see which debt settlement tactic works best for you.

Debt consolidation serves very beneficial for those who have multiple credit card debt with higher rates of interest. This relief program offers the debtor, a new debt consolidation loan which shall further be utilized to repay the existing other loans. Where commitment lies in repaying multiple creditors, debt consolidation, makes the process simpler. Along with shrinkage of interest burden, payment also is made by a single cheque through the mediating consolidation firm.

Bankruptcy is sought after, when other possibilities are ruled out. Recent amendments made in law are aimed at discouraging people from filing Bankruptcy. If you are considering this option, first screening takes the form of Means test conducted by a credit counselor, which will decide your eligibility to file bankruptcy under Chapter 7. Remember, chapter 7 does not liberate you from loan liability. Any of your asset, home or your car, shall be exploited for repaying the creditors. Chapter 13 is no better than a repayment programme. At least, the debt relief solutions do not affect your credit score.

Bankruptcy is only for those who have a financial crisis at its peak. Better way is to explore various opportunities right at the beginning. Debt consolidation shall prove successful if you exercise a discipline in repayment. Otherwise, it is another debt trap that you are into. Beware; a secured debt consolidation loan requires you to pledge your property. Sheer negligence can make you homeless. Filing bankruptcy means bad credit and this will remain in credit report for the next seven years. Any financial assistance during this time comes to you with a heavy price.

Debt consolidation shall be a better option compared to bankruptcy as it does not ruin your credit history. At the same time, debt consolidation requires a lot of prudence and commitment from your end in order to successfully settle the dues with the creditors.

BANKRUPTCY OR DEBT CONSOLIDATION WHICH DEBT SETTLEMENT TACTIC WORKS BEST FOR YOU

By: meena jha

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