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Bankruptcy or Debt Consolidation?

Got multiple creditors demanding money from you? Debts spiralling out of control? Don’t see a way to pay what you owe? In this situation you may feel bankruptcy is the only option available. However, debt consolidation could be a better alternative.

Read on and we’ll explain why debt consolidation could be the lifeline you need.

What is bankruptcy?

 

Bankruptcy is often considered a fresh start to your finances. Once you apply for this option, creditors won’t be able to take action against you, and much of what you owe should be written off. However, it does have serious consequences. For example, many of your assets and finances will be divided up and sold to raise as much money as possible for your creditors.

As a result, under bankruptcy, you could lose your home, possessions, or business.

Furthermore, details of your bankruptcy will be made public and your credit rating will be severely affected – possibly beyond repair for the foreseeable future. As a result, you will find it difficult to obtain loans or other financial products.

Bankruptcy should only be considered if you have no hope of repaying what you owe and no other options are available. Although the ‘fresh start’ can be tempting, the consequences should definitely not be taken lightly.

Is debt consolidation an alternative to bankruptcy?

 

If you want a debt solution which doesn’t have the consequences of bankruptcy – and keeps your assets secure – then a consolidation loan could be a good option. A debt consolidation provider will provide you with the funds you need to repay all your lenders. Then you just have one monthly payment to make.

This arguably is far better than managing multiple debts to creditors.

There are few cases where a debt consolidation loan wouldn’t be better for your financial – or long-term – situation than bankruptcy. However, it’s important to note that – fundamentally – this is a loan. As a result, repayments must be made.

Therefore, debt consolidation should be a great option when you have some money available to repay your lenders.

Bankruptcy or debt consolidation?

As bankruptcy should be considered a ‘last resort’, debt consolidation is usually the better option. When choosing between these two solutions, you should ask yourself if you can afford to make payments towards your creditors.

If the answer is yes (or could be yes once you’ve repaid your creditors) then you should consider debt consolidation.

As bankruptcy can drastically affect your life, it’s definitely worth obtaining professional debt advice before committing to this.

Get FREE debt advice

Choosing between two debt solutions is a big decision – especially when bankruptcy could result in the repossession of your house. To make sure you’re making the right choice, click the button below to identify if you qualify for debt consolidation.

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