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subject: Debt Consolidation And Bankruptcy – What Is Best For Financial Freedom? [print this page]


Debt Consolidation And Bankruptcy What Is Best For Financial Freedom?

Many people ask the question, "What is best for financial freedom?".

There are different types of people in the world when it comes to complete reparation of their credit and financial history. On one side of the argument there are people that favor debt consolidation.

Aurora Lillo Editor of the "Best Debt Consolidation Services" website -- http://www.BestDebtConsolidationServices.net -- pointed out;

"...On the other side of that fence are the bankruptcy experts. The truth is that both are excellent tools on the road to financial freedom. However, one truly is a method of last resort..."

A bankruptcy filing can clear up a credit report, but it will start at rock bottom. The bankruptcy notice will remain on that report for several years as well. Even if the score rises dramatically due to perfect financial advice and maintenance it can still effect many types of financial interaction. No matter how high an individual's credit rating is many companies will neither finance their vehicles and homes, nor will they lend money to an individual that filed for bankruptcy. The only positive aspect of filing for bankruptcy is the fact that the individual has a completely clean slate. They can rebuild from the ground up and when the filing finally stops being part of their report they can be completely free of its stigma. They will be free in only a few years.

However, debt consolidation can make an individual financially free immediately. There are a few negatives to this sort of practice as well but those vary with the methods used. For instance, if an individual borrows the money to repay all their previous debts and chooses to spend it all at once to close them out completely they will actually take a small hit to their credit score. This is because so many accounts closed at once. This minor hit can be repaired easily within a few months at most. However, if there was settlement activity involved as well then it might take as much as a year to completely remove the credit hit. This is still a much faster process than bankruptcy reparation. These reasons are why debt consolidation loans are the best method for achieving financial freedom.

"...There are other consolidation methods that can be used, however. One of the most common ones is utilized by the borrower paying off their newest accounts and closing them. However, they only pay their oldest accounts that are still active up to a minimum amount. Perhaps an individual had ten thousand dollars in credit card debt with four companies. Two of these cards are new, the other two are three years old. The individual pays off the new cards and closes them down. He takes a small credit hit. However, he pays off the amount needed to make his account be in good standing again with the other two companies. These are now considered positive working accounts. They are older accounts as well. This reflects better on his report. His score actually increases even as his monthly payments drop..." added A. Lillo.

Further information about trusted and reputable companies for debt consolidation by visiting; http://www.BestDebtConsolidationServices.net




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