If you are having massive credit problems, you will have to make many decisions which will affect how you recover from these problems. If you are not facing these severe credit problems, that is good news.
Hopefully with the help of the following tips and advice from people you know, you will never get into such dire straits in the first place. If, however, someone does have credit trouble, the big question they will have to find an answer for is, "which is better, bankruptcy or debt consolidation"?
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First off, when deciding which is better, bankruptcy or debt consolidation, you should know what each term actually means. There are two major types of bankruptcy which will probably be available for you. These are called Chapter 7 and Chapter 13 bankruptcy.
If you select Chapter 7 bankruptcy, your personal assets are liquidated and used to pay any unsecured debts that you have. In most cases you can keep things like your home, if you have one, or things you need for earning a living, such as your car or your tools.
You can file Chapter 7 bankruptcy only once per each six year period. Hopefully, you will not have to do such a thing more than once, if at all. Chapter 7 can only be used in cases where people have middle to low income, not much equity in their home, and few assets to sell in order to repay their creditors. In these cases debts are completely wiped out.
Chapter 13 bankruptcy is another option to consider. When you file for Chapter 13 bankruptcy, you will be able to keep your property, like your house and car. Either way, when you file for bankruptcy, you are protected against the chance of facing foreclosure and repossession.
With Chapter 13 bankruptcy things are more complicated. People who choose this route usually have a regular income or own a business, so that their debt can be restructured and deals for repayment can be arranged with their creditors.
Debt consolidation is the other option you have, and you may wonder what exactly it is. Debt consolidation is when you take out another loan to pay off your debts. You will probably have to provide some kind of collateral to ensure that your loan will be secure, such as your house or car.
If you are considering debt consolidation, your lawyer will probably be able to make deals with you creditors and get you a lower interest rate than what you are paying on those credit cards now. If you in a position to make the monthly payments to retire all your debts which are now wrapped up in one, this may be an option for you. If you can't, your home may be on the line.
So, when it comes to which is better, bankruptcy or debt consolidation, it depends entirely upon your personal situation. With bankruptcy many of your debts will be eliminated completely, but your credit score will be negatively impacted, making it hard to get credit for a period of time.
However, if you are at the end of your rope, with debts so unbearable that your future is severely impacted, with creditors hounding you, then bankruptcy will give you a fresh start. Debt consolidation may be your best option if you have a job and simply need some help in talking to all your creditors, making suitable arrangements to get high interest rates reduced, and constructing a repayment plan.
If you are having a hard time deciding on how your individual situation lines up with these solutions, be sure and call a good debt relief lawyer. Since laws vary in different parts of the country and from state to state, it is important that you have someone with authority on your side. Whatever is decided, make yourself a promise never to get in over your head in debt again. Everyone deserves a second chance, make sure to grab yours.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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