Consolidation Versus Bankruptcy
If you are having trouble dealing with all of your debts, then it's time for you to make a choice and figure out what to do. Making this decision can often be a bit difficult because all of the possible options are likely to have consequences. Two of the most popular ways to deal with not being able to pay off your debts are debt consolidation or bankruptcy. The option that you choose is going to depend on what your personal circumstances are and what is going to be most manageable for your needs.
Before you can make a decision on whether you want to go for consolidation or bankruptcy, you need to get a clear idea of what your situation is. That means that you need to determine how much debt you are currently in, and you need to make sure that you include all debts even the ones that are in collections. Furthermore, you are going to need to take a good look at your income because there will be certain income requirements for filing bankruptcy. If you do not meet these requirements, then bankruptcy will not even be an option for you.
Things to Consider with Consolidation
When it comes to consolidation, this can be a good option for those who want to be able to keep lines of credit open so that they can borrow in the future. If you consolidate, you will be able to pay off your debts and actually improve your credit score. One major benefit of consolidating loans is that this will allow you to lower your monthly payments and make things a lot more affordable for you. Debt consolidation companies will negotiate with all of your creditors to get lower interest rates for you which will result in a lower monthly payment.
Another reason why you might want to consider debt consolidation is that it will allow you to make paying your bills a whole lot easier. If you choose to go with a debt consolidation company, you will be responsible for sending one check to this company and that's it. You will not have to spend time making a bunch of payments to other creditors, as your company will do this for you. Many companies have programs that will allow you to sign up for automated payments to them. This can make things even easier on you, so you should consider debt consolidation as a means of dealing with your debts.
Things to Consider with Bankruptcy
Bankruptcy is another way that you can choose to deal with your current debts. When you choose this option, you will basically be starting over fresh. Your old debts, as long as they are included in the bankruptcy proceedings, are going to be wiped clear. You will get to begin anew and it will mean that your creditors cannot put out any more claims against you. If there are legal proceedings going on, these will be stopped once your bankruptcy has gone through.
One thing that you need to be clear on is that bankruptcy can affect your credit rating in a negative way. It will likely be on your credit report for at least 10 years, and it may make getting a loan very difficult for some time. However, it will let you wipe your slate clean and begin again. You should consider all of these issues when you are trying to decide between consolidation versus bankruptcy. Consider your personal circumstances and goals carefully, so that you can be sure to make the right choice.
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