Coastal Debt Guide

Your Guide to become Debt Free ...

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6 Step To Joining A Debt Consolidation Program
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Christian Debt Relief
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Benefits of Non Profit Debt Consolidation
In the midst of economic turmoil more people than ever are desperately searching for ways to pay their credit card debt. Most often, consumers fe...[more]
When to consider a debt consolidation program
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Tips on how to avoid bankruptcy
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How to consolidate credit card debt without hurting your credit
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Debt Consolidation Versus Bankruptcy

In today’s economy, many people are dealing with financial stress and overwhelming debts . As the economy declines, more and more people are facing the decision of whether they will use debt consolidation or file bankruptcy in order to become debt free. So which is better: debt consolidation or bankruptcy? The answer to that truly depends on the consumer’s current finances and needs. The following will help you as the consumer determine whether debt consolidation or bankruptcy is better for you.

Debt Consolidation or debt management is the process of consolidating unsecured debts into one monthly payment, often with lower interest rates. This is often done by a debt consolidation company who will in turn charge you a fee for their services. The great thing about debt consolidation is that you only have to make one monthly payment, and with lower interest rates more money is being applied to the principle balance, thus getting you debt free faster. However, debt consolidation programs cannot work with any secured debts such as a mortgage, car loan, or home equity loan, so this may not be the best option for you if this is where the majority of your debt lies. The average length of a debt consolidation program is 2-3 years, and because the debts are being paid in full, there is no negative impact to your credit score. Debt consolidation is an excellent choice for consumers whose majority of debt is unsecured, and who can afford to make a monthly payment.

If you can no longer afford to make monthly payment on your credit card bills, mortgage, car, etc, then filing for bankruptcy may be the best option for you. Declaring bankruptcy helps debtors get relief from debts they can’t pay, and the creditors will in turn get paid from whatever assets the debtor does not need to live by. Plain and simple, the biggest plus to bankruptcy is it eliminates debts and gives you a fresh start. There is no minimum amount of owed debt needed to declare bankruptcy, and once filed you will no longer be liable for debts that are included in the bankruptcy. However, bankruptcy negatively impacts your credit score and will stay on your record for 7-10 years. This may result in difficulties in obtaining new credit, and loans in the future.

Debt consolidation versus bankruptcy really depends on the current financial situation and needs of the particular consumer. Knowing the pros and cons to debt consolidation and bankruptcy, and applying those to your own financial situation can help you determine which program is best suited to help you become debt free.