Would anyone do Debt Consolidation in stead of Bankruptcy?

Question

So, what's better?? And what is the difference between the to?

Answer 1

it really depends on what you want to accomplish. although you have been given some good info so far, here's the real deal according to my personal finance class

1. both will hurt your credit score, (bankruptcy hurts more)

2. both will remain on your credit record (bankruptcy for 10 years, debt consolidation for fewer years)

3. chapter 13 bankruptcy is practically a debt consolidation plan approved by a bankruptcy court. it is really strict. you may as well try for the debt consolidation plan from private institutions

4. chapter 7 bankruptcy allows you to charge off all debt, but it is more difficult to obtain with the new bankruptcy laws.


so if your main objective is to be debt free and you don't care about your credit, go for the chapter 7. but remember that the other avenues will hurt you too.

Answer 2

If you can Debt Consolidation is better than BK. The difference in the 2 are many. First there is no credit public records that follow you for the next 10 years. Secondly you are paying your bills off.
Make sure you get a fixed note and it is for a time and payment that you can make on time every time. By Closing the un-used accounts is far less dramatic to your credit score than filing either chapter 13 or chapter 7 bk.

Answer 3

Sure. Debt consolidation allows you to rebuild your credit score while paying down debt at a lower interest rate. Bankruptcy destroys your credit, and can make it difficult to gain new accounts to even begin rebuilding it.

The new bankruptcy law also liimits who can file Chapter 7 (liquidation). Instead, most people have to file Chapter 13 (reorganization), which means you would have to repay a portion of the debt anyway.

Answer 4

I don't know a whole lot about either one, but in Bankruptsy, for the next seven years I believe it is, there are some significant restrictions on you as far as what you c an and cannot buy, or become financially involved in. And of course, you will forever have it on your record that you filed for Bankruptsy a t one point.. It probably takes longer than seven years for that to stop being an issue for whoever finds out about it., b ut then, it has a whole lot to do with how well you have managed to improve y our situation since the event. I have always felt that debt consolidation looks a whole lot better on a person's record. It indicates that person's determination to take full responsibility for his indebtedness, and not try to just get out of those obligations to others. It's all going to be a matter of individual circumstances, of course. Some people, through their own fault or not, are so deep in debt, there is just no way they could ever dig themselves out, and bankruptsy is simply the only place to go... But the thing to know is that there are absolutely free debt assistance services available these days. You can almost certainly find out about one in your area through the local Chamber of Commerce, your phone directory, or any bank. You can sit down with one of their experts, discuss your personal situation in absolute confidence, and that person can give you the very best advice about what is right for you in your particular circumstances; then assist you in setting the whole thing in motion. I do know that as of a few months ago, the laws relating to being able to file for bankruptsy have been tightened up quite a bit, for the purpose of making it more difficult for people to apply for that option as simply an easy way to slither out of meeting their commitments, so it's certainly something a person wants to get expert advice and information about.

Answer 5

Debt consolidation puts all your debt into one lump sum and gets you credit cards to make a conclusion on the amount you owe and you loose all your credit cards. You basically have no credit after you do this. With bankruptcy they take everything you owe and make it dissapear. You have to go to court and the judge decides on what to do. You still have credit and you can start earning credit cards and boost your credit up in a year. My family members have done both and bankrupcy is the best, because you still have credit.

Answer 6

NO you might as well do bankruptsy because it hurts your credit just as bad either way you go...when creditors see you went thru debt consolidation they will have trouble opening an account with you because they see you may not be able to manage your money wisely...and with bankruptsies at least they know youcannot file for another 5-7 years after you have already filed

Answer 7

Neither are good nor will they help you if you don/t have a change in your behavioral patterns. I would suggest you make contact with Dave Ramsey before you do either. He has radio shows all over, has written books, has personal experience with debt knowledge and you can find out more by going to daveramsey.com, He has the most sound and amazing advice I've ever listen to.