Credit Card Debt Consolidation Might BeThe Same As Chapter 13 Or 7 Bankruptcy
Credit card debt consolidation is not the same as Chapter 7 or 13 bankruptcy. In fact, it’s a much better alternative to either type of bankruptcy. Bankruptcy should only be used as a last result, and if you have any means to repay your debt consolidation is your answer.
Chapter 7 bankruptcy is the total removal of all your unsecured debt. Once you are granted bankruptcy under this chapter you are not obligated to repay the creditors anything. There are many drawbacks associated with this type of action. First the court has the authority to demand that all your personal belongings are sold to partially cover your debt. Many judges have been actively using this option as a way to deter bankruptcy. After you are granted bankruptcy it will appear on your credit record for 10 years. A reported bankruptcy will drop your credit score by over 350 points immediately giving you the inability to reestablish credit for a very long time.
Chapter 13 is often called reorganization bankruptcy. In this type of action the court reviews all your debts and sets up a repayment plan so that all your payments are made through the court. There is absolutely no consideration taken for ability to repay and if you miss a payment there are severe legal ramifications. Chapter 13 also carries the stiff credit score penalties that are associated with Chapter 7.
A debt consolidation program is much different. A debt counselor will review with you all your unsecured debt and once your debt is determined begin negotiations with your creditor. Debt counselors have the ability to reduce interest rates, remove penalties and negotiate lower pay off amounts. Once all the negations have taken place they will establish with you a repayment plan that entails making one monthly payment that is generally much lower, if not half, of what you are paying now. You’ll find yourself debt free in a few years time and there is minimal damage to your credit score.
In a nutshell, by researching and then comparing several debt consolidation companies, consumers are able to determine the agency that meet your your very own financial situation, plus the cheaper interest rate available on the debit consolidation market. For example, read our last debt consolidation service review: Debt Help 101 Review.
However, it is advisable working with a trusted and reputable debit counselor before making any decision, this way you will save time through specialized advise and money by getting the best results in a shorter span of time.
H. Milla G. is editor of the Get Rid Of Credit Card Debts website – visit and see his top rated debit consolidation service recommendation.
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