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Debt Consolidation: An Alternative To Bankruptcy
Home Finance Mortgage & Debt
By: Michael Johnson Email Article
Word Count: 589 Digg it | it | Google it | StumbleUpon it


At one point of time when your monthly bills start accumulating and you are no longer in a position to make any further payments, you consider filing for a bankruptcy. Before making any hasty decision, you should consider various other options to pay off your debts without damaging your credit report.

Debt consolidation is yet another positive approach towards achieving a debt free life. However it is natural of you to have a dilemma, whether to opt for debt consolidation or simply file a bankruptcy. Since debt is a very serious issue, it is advisable that you should not make any impulsive choice. You need to carefully evaluate both these options and then find out the ultimate solution that would best suit your requirements. It is actually a very controversial topic to debate upon.

Debt Consolidation:

Debt consolidation allows you to consolidate your numerous monthly bills into one single loan amount to pay off his creditors. Through this process you are able to concentrate towards paying a single creditor at a comparatively low interest rate instead of paying numerous creditors at the same time. You need to remember only one due date to pay your monthly interest. You can manage your payments in much better way and pay off your debts faster.


Through Bankruptcy a debtor expresses his inability to pay his creditors any further. The proceedings take place in a court where the judge decides upon the debtor’s payment schedule if required. Depending upon his financial stability and employment service the court might negotiate with the creditors and settle on a nominal amount. But in majority of the cases the debtor is required to surrender his home, car and other valuable assets to get out of his debts. His valuable assets are sold on bid and the money that is accumulated gets distributed among the respective creditors. The debtor loses everything because he is left with nothing in his hands. His credit report also gets adversely affected in the long run. To some people bankruptcy might appear to be appropriate technique to get rid off their financial liabilities but it becomes difficult for them to seek further loans in future if they declare a bankruptcy.

Advantages of debt consolidation over bankruptcy:

Due to the wave of recession the economic condition of the world has worsened. People are really having a tough time fighting against the financial pressure that has accumulated. Your financial situation can worsen if do not pay your debts and bills on time. A credit counseling program might be a solution to end your worries. Opting for credit counseling programs gives you a chance to consolidate your numerous loans into one single loan amount which you can pay at an affordable rate of interest every month. You need not have to pay multiple creditors but concentrate on paying a single creditor.

To some people debt consolidation is considered to be one of the best options to become debt free. But most of the people commit the error of thinking that bankruptcy is the ultimate solution. They do not understand how harmful bankruptcy might be to their credit and financial prospect. It becomes difficult for the people to improve their credit report. When bankruptcy appears to be an instant solution to your debt difficulties, the consequences remain for years later on. Prior to taking any hasty steps, you should consider other options for debt relief.

Declaring bankruptcy or opting for debt consolidation might not be an easy choice. Always seek professional advice before making any decision. But for many people it is the only debt free solution and a chance to start afresh.

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