Debt Resolution vs Bankruptcy
For any consumer looking for a way to eliminate debt, bankruptcy might seem like a viable option. While people with severe debt problems might benefit for filing for either Chapter 7 or Chapter 13, many individuals have no idea how damaging the consequences can be in both the short and long term.
Bankruptcy can be like financial chemotherapy. It can eliminate the problem (in this case, debt) but it also causes a number of other serious side effects.
When the Federal Trade Commission (FTC) warns consumers about false advertising, it highlights the following misleading claims about bankruptcy:
- Consolidate your bills to one monthly payment
- Stop harassing phone calls from creditors, stop foreclosure, repossessions, tax levies and garnishments
- Keep your property
- Wipe out your debts
What these ads don’t explain is that filing for bankruptcy can ruin your credit and cost you attorneys’ fees. There are a number of challenges you may face by filing for bankruptcy, including:
- Bankruptcy does not eliminate all debt problems, including alimony, child support, some legal debts and more.
- Bankruptcy will destroy your credit rating for up to a decade, and may not allow you to keep all of your property depending upon the type of bankruptcy you file for.
- Also, bankruptcy attorneys won’t inform you of the many other debt resolution options you can explore before filing for bankruptcy. If you have severe debt problems, bankruptcy may be the answer, but there are other options.
Debt relief can come in many forms, and a company like Consolifican help you decide which option is best for you. Debt resolution options include:
- Talk to your creditors – they may be willing to work out a modified payment plan, especially if it means getting more money from you, as opposed to a debt settlement.
- Debt Consolidation – this is the process of consolidating two or more bills and/or payments into a single, affordable payment through a repayment plan or program.
- Debt Settlement – in this form of debt reduction, you or a company negotiates a reduced balance on your debts in order to make a payment in full. This is also known as debt negotiation or debt arbitration.
- Debt Management – this is a process where a consumer will hire a third party to manage their debt because they cannot do so on their own.
- Debt Validation – you may not know this, but there are laws in place to protect consumers from abusive debt practices. A verification of debt involves confirming the debt in writing that the amount being demanded is what the creditor is claiming is owed.
- Personal Loans – you can take out a loan to pay off your debts without it being a “debt consolidation” loan. This may allow you more financial freedom without taking much, if any, of a credit hit.
At Consolifi we are 100% performance based and FTC compliant. “If we don’t resolve your debt’s to your liking, you don’t pay.” It’s that simple!