When you owe a certain amount of money to a person or an organization you are said to be in debt. When you are unable to make payments on these debts and you are even unable to pay for your everyday expenses, you are considered to be a bankrupt person. Filing bankruptcy helps you to get out of debt. However, there are various other debt relief options like debt settlement, credit counseling, and credit consolidation and so on. Now, there’s a huge debate on whether bankruptcy is a better option or is it credit consolidation that can help you become debt free.
Park Home Insurance – No matter what kind of park home insurance you require, you can be assured that you Shield Total Insurance park home insurance will give you complete peace of mind. Is bankruptcy better than credit consolidation? Most of the people consider that credit consolidation is better than bankruptcy as credit consolidation does not hurt your credit score while bankruptcy does hurt your credit. Once you file bankruptcy, it gets listed on your credit report and stays there for 7-10 years depending on the chapter that you have filed.
Bankruptcy also lowers your credit score by around 200- 350 points. However, whether or not bankruptcy is the better option or is it debt consolidation depends on various factors. It depends on the personality of the debtor, the financial condition of the debtor and the type and number of debts that the debtor has. If you are sure that you will be able to manage payments, then you opt for consolidation and if you decide to pay off the debts quickly, then you may try to consolidate your debts.
However, if you have huge debts and you are in real financial hardship which you think is not going to improve in a few months, you should rather file bankruptcy. It is true that bankruptcy hurts your credit but this is also true that if you opt for credit consolidation, your credit can be hurt. Credit consolidation apparently does not hurt your credit but as you close down your accounts after consolidating your credit cards and other debts, it lowers the available credit limit. As the credit limit is lowered, the credit usage shoots up and this in turn proves to be fatal for your credit score. Another thing about credit consolidation is that though the interest rate is lowered, if you make only small payment each month, you may end up paying more toward the interest.
Thus, as said before, if you are sure that you will be able to make more than minimum payments on the consolidated debt, consolidation is a better option. Otherwise it is better to opt for bankruptcy. Other than this bankruptcy puts a stay order on all of your creditors and lenders. So nobody can sue you and also the interests and debt amounts cannot go on accruing. Thus, you will have to decide whether credit consolidation will be better for you than bankruptcy or should it be the opposite based on your financial situation.
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