Eliminating Your Debt in the Most Convenient and Creditworthy Way

Debt consolidation has always been beneficial over bankruptcy as far as creditor’s interest is concerned.  Whereas with bankruptcy, creditors get nothing or very little from the debtor. The debt consolidation system shows positive and systematic money management in favor of them.

Debt consolidation beneficial for both:

Debt consolidation in turn could be extremely advantageous for consumers as the consolidation company would negotiate the reduced interest rate, lower monthly payments, reduced balance, cut off late fees, and finally set up the time to be debt-free. In the long run, consumers can save large amounts of money. Secured loans like car loans or mortgage loans don’t come under consolidation. Unsecured loans like bank credit cards and department store credit cards can be put into debt consolidation program.

From a creditor’s point of view, dealing with debt Consolidation Companies is beneficial. Here at least the consumer is showing an honest, strong effort to pay off the debt. By avoiding bankruptcy debtors can preserve their credit background.

A consumer who is under severe debt can look for either wiping out the debt in total or repaying it over a period of time. How do we know which one to opt between both of the options? Do we choose bankruptcy filing or debt consolidation? If it is bankruptcy, it permits consumers to remove all of their debt and start fresh. If it is the debt consolidation you can make one payment to a debt consolidation company who in turn would combine your unsecured debts and disperse the funds for you.

Let’s analyze which one looks smart and also creditworthy.

Pros and cons:

Initially from a financial point of view, bankruptcy may seem advantageous. But it is not that easy to file bankruptcy and get relieved from massive dues with little effort. Even if it is Chapter 13 bankruptcy you won’t be completely debt-free. This just extends the tenure of the repayment according to your convenience. Moreover, Chapter 7 discharge doesn’t apply to the debts created after the bankruptcy filing. The most negative aspect is the destruction of consumer credit background. The consumer loses creditworthiness which can pose many problems in the future.

Usually, after bankruptcy, a creditor has difficulty establishing credit to the debtor for the next seven years. Even if a creditor proposes to extend credit, the interest would be high and the credit term would be less for the debtor. Thus from a consumer’s point of view, bankruptcy has several ill-effects on a person’s financial life.