Bankruptcy vs. Debt Consolidation – Which is Right for Me?
Have you come to a point in your life where your debts are controlling you?
Are you struggling just to pay your bills and have the everyday necessities of life? If so, you may be considering either filing for bankruptcy or debt consolidation. How do you decide which path is the best option for you to follow?
Here’s a look at how the two differ. Once you have read the information, you will be better equipped to decide if you should contact either a debt consolidation service or someone familiar with Minnesota bankruptcy law.
The Pros and Cons of Debt Consolidation
When you hire a debt consolidation service, you hire a negotiator. The service will negotiate with your creditors, striving to achieve a lower interest rate, lower monthly payment or a smaller payoff. You should stop being harassed by your creditors because they will now be dealing directly with your debt consolidation company.
Each month you will right only one check – to the debt consolidation service.
They will then make your payments for you.
This could be helpful when it comes to dealing with your unsecured debts, such as credit cards, etc. If, however, you have secured loans, such as a mortgage or car payment, you will need to deal with them yourself.
You will have to pay a monthly administrative charge to your debt consolidation company and, remember, debt consolidation is completely voluntary on all parts. The creditors can change their minds at any time and go ahead and pursue other collection options. Bear in mind, too, that even though you may eventually pay the bill off, your struggle will still be reflected in your credit report.
The Pros and Cons of Bankruptcy
Bankruptcy is a big step. It can reflect on your credit report for up to 10 years. Despite the negative effects of bankruptcy, however, it does have some definite advantages, particularly if you can file Chapter 7, where you may eliminate much or all of your debt. Harassment, suits or garnishments from creditors will stop immediately and permanently.
You will no longer be burdened by the repayment of these debts. Best of all, you get a new financial beginning.
Getting out of debt is important, but you need the method that is right for you. Consult a lawyer familiar with Minnesota bankruptcy requirements to dispel any bankruptcy myths and to learn more about your options.
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