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Debt Consolidation Or Bankruptcy?

Many people facing overwhelming debt challenges say they want to avoid bankruptcy at all costs. They may believe that having bankruptcy on their credit reports for 10 years will be an obstacle and a matter of shame. They equate bankruptcy with failure — an absolutely last resort, financially speaking. They may believe it is morally wrong to renege on debts they signed and agreed to repay.

All of the reasons people give for avoiding bankruptcy are understandable — yet debt that gets out of hand demands a solution. Some people take on second jobs, sell assets or look for new ways to economize in order to pay back debt that is out of control.

What About Debt Consolidation?

Another popular solution is debt consolidation. In a typical debt consolidation scheme, debt relief companies collect a set affordable monthly amount from a debtor and distribute the money proportionately among creditors. The debt relief company negotiates directly with the credit card companies and other creditors, usually resulting in much lower interest rates.

The benefits of debt consolidation may include:

  • A manageable, lower monthly payment for a debtor
  • Avoidance of bankruptcy on one’s credit report
  • A strong incentive to discontinue overuse of credit
  • Lower interest rates

Is debt consolidation the answer to your financial worries? Can a good debt consolidation plan allow you to pay off your debt affordably while avoiding bankruptcy? The plan may sound good — but we must issue a word of caution here.

As experienced bankruptcy lawyers, we have heard tale after tale from clients of ours who tried debt consolidation — and failed. All they accomplished was to delay the bankruptcy process. Meanwhile, they have made payments to the debt relief company without solving the problem.

Debt Relief Law Firm In Stockton

Why do so many people have such a hard time completing a debt consolidation program? Unfortunately, once the horse is out of the gate, it will run home toward the barn as fast as it can. Once debt has spiraled out of control, debt consolidation is often too little, too late to resolve the root of the problem: an unmanageable balance between debts on one side and assets and income on the other side. Furthermore, some creditors refuse to participate in the debt consolidation scheme.

On the other hand, consider the benefits of bankruptcy. (Follow the link to our page on that topic.)

Bankruptcy Attorneys Offering Free Consultations

Get answers to your questions about how to find the debt relief you need. Call us at 888-915-0422 or contact us online. Distressed debtors in the Central Valley area of Northern California are welcome to consult with Bird & Van Dyke, Inc. – A Professional Law Corporation, regarding alternatives to bankruptcy, including debt consolidation.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.