Trying to pay off debt can be challenging, especially if the load feels insurmountable. Fortunately, there are ways to relieve the burden with a range of options to reduce the payment amount or number. Two popular options that people tend to consider is debt consolidation or bankruptcy. Below, find the differences between the two approaches to resolving financial problems. It is always best to make an informed decision when facing an issue with finances.
Filing for Bankruptcy
There are two programs of bankruptcy code for borrowers who are unable to meet their financial obligations. The first is Chapter 7, which allows a person to discharge most unsecured debt, allowing a clean slate to start rebuilding a financial future. Then, the next is Chapter 13, which provides a structured method of catching up on secured debts, including car loans and mortgages. Then, most consumer type accounts are eliminated. Typically, a bankruptcy attorney works with the client to determine which program is a better fit, given the situation.
Unlike bankruptcy, debt consolidation doesn’t actually decrease the amount of debt that is owed. Under these programs, a person is able to take out a new loan to pay off all of the existing accounts involved in their debt. This allows them to focus on one monthly payment rather than trying to budget multiple payments each month. This is a great way to lower the overall monthly payment as well as the interest rate.
When making minimum monthly payments on multiple credit cards, it can be disheartening to see the balance barely decrease month after month. By consolidating everything into one manageable payment, it is much easier to make progress and see brighter times ahead.
There are a few ways to go about tackling the debt. A debt consolidation company actually works to negotiate with creditors to lower balances and reduce payments. This is ideal for someone who has bad credit or can’t get a loan to consolidate everything.
Last, those who own a home or have equity may apply for a home equity loan. This is basically a mortgage. Some refer to this as a second mortgage or home equity line.
Those who are ready to explore the different loan details can visit https://debtconsolidationusa.com . They offer a free savings estimate and can discuss the options and help offer some relief. They offer a simple 100% satisfaction guarantee.