You may have seen a television commercial by a debt consolidation agency, promising to take care of your debt and make things easier for you.While there are a few advantages to debt consolidation, it is important that you consider weighing the pros and cons of debt consolidation versus bankruptcy.If your debt is all credit card debt, it may be possible to, with the aid of a debt consolidation service to work out a payment agreement with the credit card companies.However, if you have a title loan and need to keep the vehicle or other creditors, the debt consolidation service will probably not be able to help you.It’s also important to note that there are a number of debts that cannot be included in a bankruptcy.They include: Though, notably, in the case of federal student loans, it is sometimes possible to get the debt discharged if the individual can prove that repayment would cause a tremendous burden.
A Chapter 13 filing requires that you begin reorganizing your assets and paying off debts within three to five years. Debt consolidation services work quietly behind the scenes to help debt owners get a handle on their debt.
Debt consolidation services work as the middleman between the debt owner and the creditors, contacting the creditors and requesting reduced payments so that the debt owner can begin paying off money that is owed.
Filing for bankruptcy, on the other hand, is a legal process during which you block creditors from your finances as you attempt to re-establish yourself financially.
Bankruptcy is the process established to allow individuals and companies to eliminate or “wipe out” their debts, under the guidance of the courts.
There are numerous forms of bankruptcy, each one designed for a different entity or situation.At Chang & Diamond, APC, our San Diego bankruptcy attorneys can explain to you the benefits of bankruptcy as opposed to debt consolidation, so that you can make an informed decision knowing all your options.