Pros and cons of consolidating credit card debt

02-Jun-2020 23:41

You are able to obtain a fresh start once the bankruptcy is complete, and obtaining credit after bankruptcy is much easier than you would expect.

Cons: Not everyone will qualify for a Chapter 7 or Chapter 13 bankruptcy.

Once you make the decision to do something about it, you usually contemplate debt consolidation or bankruptcy. Below we have explored some of the benefits and drawbacks of each.

Debt consolidation can take many forms, but for this blog we will look specifically at companies that take some or all of your debts and negotiate a settlement with your creditors.

The options that exist for those indebt include a home equity loan if they own a home.

Prior to making this choice, make use of the debt consolidation calculator to have an overview of the monthly payment options. In debt consolidation, the consumer is usually given a loan to cater for all of their smaller loans hence leaving them with a single monthly payment other than making payment for several loans.

However, this is one of the major financial decisions that consumers should research on in order to make the best loan choice in consolidating their debts.

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In some situations, Chapter 7 bankruptcy is the correct approach and it will completely eliminate debts on credit cards, medical bills, personal loans, foreclosures, repossessions, etc. The Trustee is appointed by the federal government and payment made by the Trustee are scrutinized and audited.

One of the common beliefs is the perceived advantage of easily managing a single payment.

The objective is to get a lower rate of interest and a decreased monthly remittance while still able to pay off your debt quickly.

Once the bankruptcy is filed, a “stay” in enacted which keeps your creditors from suing you, repossessing or foreclosing on your property, or taking further legal action against you.

You are not taxed by the Internal Revenue Service on the debt forgiven in bankruptcy.

Bankruptcy is viable option when a fresh start is needed.