Bankruptcy - Is it an Option?
If your credit is poor and you want to cut your debt you have a number of possible options available to you. None of them will get you out of debt overnight, but they can get you on the road to recovery.
The ones we'll look at today are a debt consolidation loan, which can lower your monthly payments and reduce your interest, hiring a debt consolidation firm that might negotiate lower interest rates for you, and the last resort of debt consolidation - bankruptcy.
Debt Consolidation Loan
To qualify for a debt consolidation loan you will have to offer collateral. Most people use their home to get secured debt in order to pay off their unsecured debt such as their high interest credit cards.
If you decide to go this route make sure that you actually will be paying lower interest that you are now. And do not borrow more than you can comfortably pay back because if you default on this loan you can, and probably will, lose your house.
Debt Consolidation Firm
A debt consolidation firm will negotiate lower fees with your creditors. You will pay the debt consolidation program and they will pay your creditors. These firms charge you administration fees to do your work for you.
On the one hand this can be a good option because you are showing your creditors that you are committed to repaying what you owe.
On the other hand, there are a lot of debt consolidation programs that are outright scams. Some charge exorbitant rates while others structure their repayment programs so literally a year or more can pass before your creditors are paid. And during that time you could be subject to litigation.
Many people can actually do a lot of what they would hire a debt consolidation firm to do. For example, you may want to call up your credit card companies and see if you can negotiate lower rates on your own. Doing it yourself is certainly worth looking into.
Debt Consolidation - Bankruptcy
Bankruptcy should absolutely be your last resort because since the bankruptcy laws have changed it, the way payments are now structured you will probably find it very difficult to live even a semi-comfortable life.
Whatever route you choose, you should do a lot of research before signing any paperwork. Your future, as far as your credit and your quality of life are at stake.
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