Today’s society has easy access to credit, and that credit can get out of hand and bury you in debt that you can not repay. If you are to a point where the bills far outbalance the money coming in per month, it is time to consider your options. Those options involve filing for bankruptcy and turning to debt consolidation.
Both of these options have various aspects that can be different for different people. Therefore, there is no blanket ideal route to take for anyone. It is best to consider the options carefully to find the best options for you and handling debt.
What is Debt Consolidation?
Debt consolidation is a great route before you start filing for bankruptcy. The intent of debt consolidation is to work with all your creditors and create a single payment each month that goes toward all the bills you currently owe. Usually, this is done by working with a company that specializes in debt consolidation.
When considering debt consolidation, ask yourself the following questions: Can I be disciplined and not re-spend once my balances are at zero again? Will it be worth it to consolidate my high-interest debts? Is the contract from the debt consolidation company in my best interest?
It is also to be noted that certain types of debt are not eligible for consolidation through companies like this. So consider carefully what your debt is, what is eligible and whether it is the best route for you and your specific debts and future plans.
What is Bankruptcy/What Types Would be Relevant?
Bankruptcy is when a person acknowledges they are buried by debt and allows the person to get past some debts and arrange a payment plan to deal with others. There are two types of bankruptcy: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
Chapter 7 Bankruptcy is for when the person in debt has no reliable means of income to pay back the creditors. In this instance, all nonexempt assets are sold to put the money toward the bankruptcy, with a few notable exceptions such as one vehicle as a means of transportation, etc..
Chapter 13 Bankruptcy is for those who are in debt but have a regular income. This helps these individuals create payment plans or otherwise address the debt in question. This is a good idea for those who are hoping to save their home from being foreclosed on. It also is helpful since it does not focus on possessions and their sale as a means to pay back debt.
How Do I Know What’s Best for Me?
Since there is a lot more to each of these options than mentioned above, it is a good idea to consult a legal professional if you are still unsure which option is best for you. The lawyers at SM Law Group have extensive experience in dealing with debt and determining the best option for your specific situation. They can help you consider factors you may have ignored while determining the best option for you. They can also help you find a reputable debt consolidation company if that is the route you choose to take.