When you have a lot of debt, and it seems you will never see the light at the end of the tunnel, it can be hard to figure out which way to go to get your debt and finances under control. The good news is that there are options to help you get out of debt. Choosing which one is best for you will depend on your financial situation, but the voices for eliminating debt are limited to bankruptcy and debt consolidation. Filing for chapter 7 or chapter 13 bankruptcy should be your last choice. Debt consolidation for bad credit a much better alternative.
Bankruptcy vs. Debt Consolidation
Bankruptcy can remove all or most of your debts depending on whether you file for chapter 7 or chapter 13 bankruptcy. Under chapter 7 bankruptcy, you will most likely lose a portion of your assets that will be sold to partially repay some of your debts. After some of the debts are paid or partially paid, any remaining debts will be discharged. Chapter 13 bankruptcy involves a court-approved repayment plan over a period of three to five years. After the court-appointed time period has expired, any remaining debts may also be discharged.
Bankruptcy should always be your last option and should only be considered if your deep in debt and your home is in danger of foreclosure. Filing for bankruptcy will harm your credit score for many years. Debt consolidation is a much better alternative to bankruptcy, and it can save your credit score while paying off your debt at the same time.
Debt Consolidation Loans
A debt consolidation loan is one debt consolidation method that can keep your credit score in good standing and repay some or all of your creditors. A Debt consolidation for bad credit is a personal loan you take out to pay off your credit card and other debts. Consolidating your debt to a single low-interest-rate loan can be very beneficial and save you money on interest.
Debt Consolidation Using Debt Settlement Company
Using a debt consolidation settlement company can hurt your credit but not as severely as filing for bankruptcy. A debt settlement company will negotiate with your creditors to reduce your monthly payments until your debt is paid off. This is a good choice for people who have fallen behind in payments but still have enough income to pay off their debts with lower payments.
Getting out of debt possible without filing for bankruptcy. Using debt consolidation can lower your payments or combine them into one simple payment that’s more manageable and affordable while keeping your credit score intact.