What Is Better, Debt Consolidation Or Bankruptcy?
Posted on July 21, 2009 at 12:00 am
i've wanted to ask this for a long time now, and i want to know which is the best option for any consumer who's fallen behind on their debt. i want to know the pros and cons of each, and why should i pick one over the other. so.. what is better, debt consolidation or bankruptcy?
Posted on July 22, 2009 at 12:37 am
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Posted on July 23, 2009 at 3:19 am
If you make more than the average person in your state, then debt consolidation is the better option for you. Bankruptcy entails having to pass "the means test"--meaning, your income should at least be only at a certain amount before you can actually qualify for Chapter 7, or a liquidation bankruptcy.
Debt consolidation allows you to take care of all your bills without potentially losing your home and other belongings. One good advantage that debt consolidation has over bankruptcy is that its effects on your credit report as not as drastic as bankruptcy's is.
Posted on July 23, 2009 at 3:57 am
To answer your query "what is better, debt consolidation or bankruptcy?" Here is one thing that you also need to consider. When you file for Chaper 7 bankruptcy, the notation for that will remain on your credit report for 10 years. For Chapter 13, on the other hand, it will be recorded on your file for 7 years. Both chapters also stay on your credit report for as much as 20 years.
Also, most application forms for companies, credit, and the link include a question asking the individual whether they have previously filed for bankruptcy or not. Denying a bankruptcy filing is deemed a criminal felony.
Posted on July 23, 2009 at 4:28 am
what are the effects of debt consolidation on my credit report?
Posted on July 23, 2009 at 4:49 am
Debt consolidation is a loose term that can pertain to any of the following: credit counseling, consolidation loans, debt settlement, and bankruptcy. I believe that the effects of a bankruptcy on the credit report has already been stated.
For debt settlement: A settled account will stay on your credit report for approximately 7 years
For credit counseling: If you signed up with a credit counseling agency, it will be reported as such on your credit report
Posted on July 27, 2009 at 2:56 am
how will that affect my credit score if my debt consolidations have been reported on my credit file?
Posted on July 27, 2009 at 3:34 am
In credit counseling, for instance, the account will just reflect that it has been enrolled in a debt management program. That note does not in any way have any significant impact on your credit score, if that is what you are concerned about.
On the other hand, bankruptcy has more drastic effects on your credit report. These have been mentioned earlier in the thread.
Posted on July 27, 2009 at 4:12 am
I think the answer to the question which is better debt consolidation (loan?) or bankruptcy is always categorical. It depends on what the consumer is capable of undertaking. If the consumer is sure that he/she is not going to miss payments on the loan, then perhaps it is better for her to consolidate her debts and pay it all off with a loan. Worry about the interest laden consolidation company later. Again, only if he/she is sure that she's not going to ever default.
Bankruptcy is only really better if the consumer needs the automatic stay protection.
Posted on July 27, 2009 at 7:49 am
If I have no assets and no way of making large monthly payments, which is better debt consolidation or bankruptcy?
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