Who Debt Consolidation Works Well For
This is not to say that debt consolidation is always a bad plan. For people who have access to a pool of money to start out (such as an inheritance or gift from family) debt consolidation makes sense because you should be able to settle your debts quickly without missing many months of credit card payments. If you dont have to pool money over a long period of time, then you can also save a lot in consolidation fees. When you start out with a pool of money to place, the debt consolidation company can begin negotiating your debts immediately so that you have less time you missed payments on your credit. Consolidation may also be appropriate for people who have a lot of extra income each month, so saving a pool of money can be accomplished easily. The problem is that most people who go through debt consolidation do not fit under this category.
Why Bankruptcy May Be a Better Alternative
Most clients who end up hiring my office after attempting a debt settlement program have said that looking back, bankruptcy would have cost them a lot less, been completed faster, and would have gotten rid of all their debt promptly. They often regret not consulting with a bankruptcy attorney early on to understand how bankruptcy may be able to assist them. In speaking to bankruptcy clients who attempted debt settlement in the past, there are some common reasons why bankruptcy was a better alternative for them in the long-run.
Youll Know Exactly When Youll Be Debt Free
When you hire a bankruptcy attorney to file your case, a reputable attorney will be able to tell you exactly how long it will take to complete your bankruptcy case. Under bankruptcy rules, the debt you owe will be considered wiped out as of the date your bankruptcy case is filed. This means that as your case moves through the court system, you are not taking monthly hits to your credit while you are waiting for the case to be approved. Your credit score will take the one-time drop due to the bankruptcy filing, not a lengthy downward spiral with no definite end in sight. As soon as your case is over, you can immediately begin the process of rebuilding your credit.
Bankruptcy Stops Lawsuits, Bank Account Levies, Garnishments and Foreclosures
The filing of a bankruptcy case will immediately stop collections lawsuits against you. It will also stop bank account levies, garnishments being taken from your wages, and foreclosures. The ability to stop these legal actions against you comes directly from a US Bankruptcy Court Order giving you automatic relief from your creditors. If a creditor continues to pursue collections against you, then you can petition the Bankruptcy Court to assist you in getting relief from the harassment.
You Have a Court Order Protecting You From Creditors in the Future
One bankruptcy case will take care of all of the debt you have. You do not need to approach every individual creditor to separately negotiate your debts. In the event that you have trouble with a creditor in the future, you have a court Order that formally discharges your debt. If a creditor refuses to acknowledge that their debt was wiped out in bankruptcy, you can petition the United States Bankruptcy Court to assist you in enforcing your court Order.