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Question by Snowsky S: What happens to debt consolidation when you file bankruptcy?

Best answer:

Answer by Miss Jackie Fattybumbum
It usually gets written off but not all the time, it’s up to the judge.

Add your own answer in the comments!

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Article by David Faulkner

The way to establish a good credit rating is to use your credit in such a manner that your total debt never approaches your total credit limit, and that you always make your payments by their due dates. Getting a bad credit rating means that you have a record of incurring over limit charges and late payment fees.

But no matter how stellar your credit history, as long as you owe money, you are at risk of having that credit history damaged either by bad financial management, or by circumstances completely beyond your control. A sudden illness and the accompanying medical bills, the loss of a job, or a denied insurance claim can leave you struggling with a financial nightmare, and dependent on credit cards or other loans to keep you afloat until things turn around.

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Question by uncletoon2005: Bankruptcy, consolidation, or debt reduction?
I’m looking at an uncomfortable situation. My family has a considerable amount of debt. We’re talking around $ 30,000. We are currently able to manage payment on our cards, but we’re not able to get anywhere. We’re at a point of near desperation. So I was wondering what was best? Should we file for bankruptcy, try to get a loan for debt consolidation, or try one of the debt reduction programs out there?

I’m really not sure what would be best. Consolidation would be ethically best in my opinion, but from the couple of places we’ve tried, no one will give us a loan. Any advice or personal stories would be appreciated.

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Article by Meena

There are many options for debt relief if one is in debt like debt settlement, debt consolidation, debt negotiation etc. The Debtors if they have lots of debts sometimes consider going for bankruptcy as an option. But, declaring oneself bankrupt comes with its own difficulties and hazards. If you are looking for bankruptcy as an option, then you should forget about being financially stable afterwards as well. Bankruptcy lowers your credit score which means that the next time if you apply for some loan from a bank, the bank will not approve it for you. The bank always feel a bit hesitant to give loans to a person who has declared bankruptcy as there is question mark on the financial stability of that person.So, before one goes for bankruptcy, one can look for other relief options as well. Debt consolidation is a very good option as it takes comparatively lesser time to reduce your debts. The debtors usually have many debts in their kitty, because of which they have to pay various installments for various debts. The debt consolidation as an option helps the debtors to consolidate their debts into a single debt so that instead of many debts, the debtors have to pay just one installment for a single debt. Apart,form the one consolidated monthly payment, the debt consolidation services have various services which help the debtors not to fall in any debt trap further.In the other relief options other than bankruptcy, the debtors can get their debts reduced through the firms, by negotiating with the creditors and the debtors do not have to deal directly with the creditors, which is one of the benefits of the debt consolidation. Hence, for a better financial future one should avoid bankruptcy.In current market condition it is better to plan well and come out of the debt in phased manner.

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Article by Jessica Thomson

Debt consolidation can be defined as taking out one loan to pay off many others loans. This is normally done to secure a lower interest rate and also secure a lower fixed interest rate or for the convenience of servicing only a single loan. a form of a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as security, most commonly a house or factory in case or a work place etc. In this case, a mortgage is secured against the house. The valuation of the loan allows a lower interest rate than without it, because by valuation, the asset owner agrees to allow the forced sale of the asset to pay back the loan. The risk to the lender’s side is reduced so the interest rate offered is lower.Consolidation will affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be taken very carefully.Bankruptcy v/s Debt ConsolidationThe Advantages of Bankruptcy:If you file for bankruptcy, you will be granted immediate but only temporary relief with the automatic stay. The main motive of bankruptcy is the relief of most, if not all of your debts. You are debt free legally once you get the discharge and you can have a financial fresh start.The Negative Effects of Bankruptcy:The biggest fallback of is the immediate impact on your credit score. You cannot clear bankruptcy from your credit report for 7-10 years.The Advantages of Debt Consolidation:It helps an individual from handling large debts from multiple creditors. It joins all your debts into one single debt management program. It lessens the interest rate and cuts off the late fees on your loans.The Negative Effects of Debt Consolidation:It will have minimal impact on your credit score. Till the time you fully pay your accounts, a note saying that you are paying by credit-counseling agency will appear on your credit report.There is actually no simple solution to getting yourself out of debt. Bankruptcy can instantly donate debt relief but at the cost of your assets and credit score. Debt consolidation is easier with minimum effect on your credit, however, it does take time

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