Bankruptcy or Debt Consolidation: Which is better?

When you are overwhelmed by debts and desperately seeking a way out, the question might arise in your mind that which is better, bankruptcy or debt consolidation. Both options have their own benefits and drawbacks.

While you face embarrassing situations due to your increasing debt burden, you might go on to obtain new loans for the purpose of repaying the earlier loans. However, most of the times you would find it impossible because carrying on with a number of loans is often very much risky and this would progress towards bankruptcy. If you feel that you are not able to repay your loans, at that time you can file for bankruptcy. If you are declared as a bankrupt person, you would be freed from your debt obligations. Alternatively, bankruptcy remains in your credit report for seven to ten years. Due to this cause, you need to make an attempt to pay off your debts rather than filing for bankruptcy. You have got some ideas on Which is better bankruptcy or debt consolidation?

One method of avoiding bankruptcy is to receive a debt consolidation loan. For controlling your debts, debt consolidation can work as a useful tool. It combines your every debt carrying high rates of interest into a single loan bearing a low rate of interest. This reduced rate of interest allows you to pay reduced monthly payments. This loan is available in both secured and unsecured forms. You should try to obtain a secured debt consolidation loan since it bears a lesser rate of interest. An unsecured debt consolidation loan carries a higher rate of interest, thus it nullifies the benefits of consolidating debts with higher rates of interest into a debt consolidation loan with lower rate of interest. Nonetheless, debt consolidation may not be advantageous for you if you have a poor credit.

Whether bankruptcy is better than debt consolidation or vice versa is a matter of speculation. Therefore, it is recommended that you seek the advices of an expert financial consultant. He will tell you which of the two is right for you.