Consolidating debt vs bankruptcy
Readers also ask Consolidate your debt if you can get a loan at better terms and/or it will help you make payments on time.Just make sure this consolidation is part of a larger plan to get out of debt and you don’t run up new balances on the cards you’ve consolidated. Debt consolidation can help your credit if you make on-time payments or consolidating shrinks your credit card balances.Two primary types of bankruptcy are available to individuals: Chapter 7 and Chapter 13.Chapter 7 bankruptcy requires the debtor to surrender any assets that are not protected by law to repay his or her debts.It’s also not the solution if you’re overwhelmed by debt and have no hope of paying it off even with reduced payments.If your debt load is small — you can pay it off within six months to a year at your current pace — and you’d save only a negligible amount by consolidating, don’t bother.
You always make your payments on time, so your credit is good.
Debt consolidation is an alternative that may be more beneficial for some families with overwhelming debt.
If you are considering either of these two options, review the pros and cons of each one before you make the decision.
So consolidating your debts typically results in a lower monthly payment obligation. You want monthly payments you know that you can handle.
Second, unlike other options, it won’t crush your credit.