If you have to make the hard decision about debt consolidation vs bankruptcy how do you know which is the best solution? There is no hard and fast rule that one is going to be better than the other because each situation is different. Credit counseling along with debt consolidation may help you preserve your credit scores to some extent. If you are so far behind in your payments you will already be facing low scores, but with a debt consolidation loan you aren’t defaulting on your debt like a Chapter 7 bankruptcy. A Chapter 13 bankruptcy is a repayment plan, yet it is slightly different from a debt consolidation loan.
With a debt consolidation vs bankruptcy choice you might be able to salvage your credit a little easier if you choose the debt consolidation. You will have the bankruptcy on your credit report for seven to ten years regardless of the type of bankruptcy that you use. When you have a debt consolidation loan you retain a little more control of your credit ranking. When looking at debt consolidation vs bankruptcy you should think of it as a last resort to declare bankruptcy. There are some debts that can’t be erased if you declare bankruptcy.
If you have student loans, legal fees, court fines, taxes, child support or alimony you won’t be relieved of these debts with a bankruptcy. Foreclosures, wage garnishments, repossessions or losing your utilities might be avoided with a bankruptcy, but it depends on the laws of the state you live in. Working with a debt management company to procure a debt consolidation loan might be a better alternative for your high interest rate debts. They can usually get you a lower monthly payment so that you have some extra money to save for emergencies. Debt consolidation vs bankruptcy offers you two options to get out of debt, but a bankruptcy may cost you more than a consolidation in fees. You have to pay fees to the court to file bankruptcy and if you hire a lawyer you must pay them as well. There is much to ponder in the debt consolidation vs bankruptcy debate.