Bankruptcy Versus Debt Consolidation
A lot of debtors today struggle with the question of filing for bankruptcy versus taking up a debt consolidation loan. Although worth thinking about, the former should always be avoided as far as possible.
Despite what people say about you getting a fresh start and that in seven years you will have a clean slate financially, the truth of the matter is that once you’ve filed for bankruptcy, your credit record is tainted for ever. Every potential lender would henceforth look at you as a risk not worth taking. No one right from mortgage lenders to credit card companies would be comfortable dealing with you.
To make matters even worse, a new law has been passed by the Bush administration to the effect that if you go bankrupt because of credit card payments, the credit card company can claim your family home. Although it is transparent that a lot of money was passed into the hands of congressmen and senators to facilitate the passing of this bill, it is a reality nonetheless. People are not aware that simply filing for bankruptcy can cause them to lose everything they have.
Given the above picture, debt consolidation loan definitely seems the more sensible route to take. A debt consolidation loan is a loan taken from a bank or other financial institution in order to pay off all your dispersed debts at once. Debt consolidation loan interest rates are lower and the repayment duration allowed is longer. This means that you now have to pay off only one long-term debt rather than many short term ones and that too at a lesser rate.
Debt consolidation loan certainly seems more beneficial since it buys you more time and also decreases the rate of payment.
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