Have you been looking for information on how debt consolidation and bankruptcy compare? If you are having financial difficulties, you have probably looked into whether it would be a better idea to try to pay down your mounting bills or simply default and watch your credit score suffer.
Whatever you choose, it is important to know the difference between getting a loan to consolidate your obligations and going through the court to get those obligations removed.
When you file for bankruptcy, you stand to loose quite a bit.
While you will be able to avoid paying off accumulated debt, you will face a difficult set of consequences.
Your credit score will be very low for at least seven years, making it difficult to apply for new loans and credit cards when you need them.
Because your financial status will be known to anyone who checks, it might also be hard for you to get an apartment, job, or car.
To make matters worse, you may loose property that will go toward paying off your creditors.
Consolidating your debt is a great alternative to going bankrupt.
You will get your bills paid off by paying on a loan with a monthly payment low enough that you can afford it while having financial difficulties.
You will not have to give up any of your property to pay the money you owe.
Unlike walking away from what you owe, a consolidation loan will actually help you raise your credit score by giving you a way to make regular monthly payments and avoid late bills.
Getting your credit consolidated is a great alternative to defaulting on your loans.
Choosing to walk away from payments reflects badly on your credit even when you go through the legal process and do it right.
Alternatively, when you group what you owe into one convenient sum, you pay off your bills and improve your credit score no matter how bad your financial situation.