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Take Refuge In Debt Consolidation Not Bankruptcy
By: Jason Holmes

Debt consolidation and bankruptcy are not uncommon these days. But before we are accustomed with the debt consolidation options in, which we may take refuge, a simple understanding of the terms is necessary.

What is bankruptcy?
Bankruptcy is a legal procedure, wherein a debtor who is unable to pay back the money he had borrowed is allowed to “refresh” his financial position. Filing for bankruptcy is as per rules of the Federal Law.

Bankruptcy damages credit history and causes financial injuries:
Whenever a borrower files for bankruptcy, no creditor is allowed to demand for the unpaid amount from the debtor. However, this process looks simple but is governed by stringent policies of the Federal Court. It also damages ones credit report and may inflict long term financial injuries to a person.

Bankruptcy is not a cure for all your financial problems!
It is a proven fact that bankruptcy has caused more harm than good. The following facts support the same.

* Borrowers filing for bankruptcy lose their assets in most of the cases unless the property is under the “exempt” category.
* Bankruptcy is of no use for the debt accounts, which arise after an individual has filed for bankruptcy.
* Bankruptcy cannot protect the co-applicants (or co-signers) in the debt accounts. If there are two or more than two applicants for the same debt account, even if bankruptcy relieves the main applicant, the others will have to pay full or part of the unpaid debt amount.
* Bankruptcy cannot help in certain types of debts (as per Bankruptcy Law). These may include court restitution orders, certain types of taxes, alimony, child support and student loans.
* Filing for bankruptcy means the financial control is being transferred to the magistrate handling the case and the fate of the debtor lies in his hands.
* Bankruptcy can also affect ones employment and career prospects. There are many employers who decline job applications if they find the applicant is bankrupt.
* Bankruptcy affects ones credit history and credit score. If a credit report is damaged, it remains there for a period of seven (7) years. It decreases the possibility of getting loans in the future.
* From the social point of view, ones self esteem get badly affected.

From the above section; it indicates that bankruptcy should be avoided as far as possible.

A still better option is debt consolidation.

What is Debt consolidation?
Debt consolidation involves repaying the debt amount in a more organized, planned and systematic manner. There are many options available under debt consolidation programs.

Let us see the alternatives to bankruptcy, which is widely availed by people and which gives ample scope to regain ones financial stature at the earliest.

The following options are available for solving ones debt problems.

* Debt settlement: A borrower is permitted to pay less than the actual amount. This settlement may be up to 40% to 60% of the total outstanding amount. The money can be paid on a monthly basis. One may take the help of a debt consolidation firm.
* Self repayment:By doing some amount of introspection, it is easy to recognize the areas where expenses can be cut. Working out a budget and following it is important.
* Debt consolidation programs:It helps a person in debt to roll up all his debt accounts in to one and finally pay off to one creditor in one go. It also allows a debtor to pay much less than the amount he was supposed to actually pay. Debt consolidation firms help in going about the entire process.
* Debt consolidation loans: A kind of personal loan in, which the person in debt can pay off all his debts in a single payment.

What can debt consolidation do for you?

* Debt consolidation can help you avoid bankruptcy.
* It can stop all harassing and abusive calls from the creditors.
* It can repair your credit score
* Make you debt free by making a single payment to the creditor.
* Help you pay less.
* Enjoy lower rates of interest
* Help in waiving off fees for defaulted payments
* Finally give you peace of mind.
* Make you debt free

Debt consolidation agencies guide individuals in relieving you of debt.