When you are facing a mountain of unpaid bills, it is important to weigh your various options for obtaining relief from your debt. Two of the most common options individuals consider are debt consolidation and bankruptcy. We can review your individual circumstances and help you determine which option will be most beneficial for you, but below is a quick summary of each to help give you guidance.
Consolidating Your Debt
The process of consolidating your debt involves obtaining one larger loan that is used to pay-off various other smaller loans. In order for debt consolidation to be advantageous to you, it is important to negotiate more favorable terms for the new loan. In other words, you want to make sure your new loan has a lower interest rate and it permits you to pay several smaller debts with minimal or no harm to your credit score.
One of the primary disadvantages of loan consolidation is that it is time-consuming and there is not guarantee of the end result. You must coordinate with numerous lenders to ensure that the smaller loans will be paid in full and that you will only end up with one larger monthly payment.
Another difficulty with debt consolidation is that it can be difficult for you to qualify for the new, larger loan. If you have been struggling financially for some time, your credit score may be too low to be eligible for the larger loan. Additionally, once you have the new loan, you still have to pay it! Thus, you must figure out if you will actually get any financial relief in the end.
Most individuals seeking a “fresh financial start” file a Chapter 7 or Chapter 13 case. When you file bankruptcy, the automatic stay immediately goes into effect and prohibits any further collection activity against you. This means no more harassing collection calls or letters. Typically, your unsecured debt such as credit card and medical debt is discharged or eliminated. Thus, one your bankruptcy filing is successfully concluded, you are not obligated to pay any of the discharged debt, which can be a huge financial relief.
The downside to filing bankruptcy is the negative impact it has on your credit score. However, in many cases, your credit score is already low due to missed payments and defaults, so the impact is actually minimal.
If you are interested in learning more about how debt consolidation or bankruptcy could benefit you, call DeLadurantey Law Office, LLC today.
If you are considering debt consolidation or filing for bankruptcy protection, let us help. We understand how important your matter is to you, and we will handle it with the discretion and dedication that have become our calling cards. Contact the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC today by calling 414-377-0518. Like us on Facebook.