Bankruptcy vs Credit Consolidation – Which option should I choose?

Is your personal debt becoming too difficult to manage? Then you may need to look at alternative solutions. Maybe you are considering bankruptcy as an option or looking for other ways to get rid of the debt.

Bankruptcy vs Credit Consolidation

Bankruptcy vs Credit Consolidation: While filing bankruptcy allows you to regain control over your debt and start life anew, it should only be considered as a last resort. Another alternative worth considering is credit consolidation. Remember that it does not offer the same legal protections as bankruptcy and may not be the right choice for everyone. If you’re sitting on the fence and contemplating which path to take, here is some basic information to help you decide.

Bankruptcy may be a better option than credit consolidation if you risk losing your home to foreclosure or risk having your car or other personal property repossessed. It’s also ideal for scenarios varying from a recent job loss if you have no other source of income or if you have high credit card debt.

Should I opt for Credit Consolidation?

If you feel you can get out of your debt situation but need a helping hand, you may go for credit consolidation. It typically involves working with a credit counselling agency that specializes in negotiating with creditors. You will most likely make monthly payments directly to the credit counselling organization, which will in turn pay your creditors, usually after negotiating for a lower interest rate and/or reduced balance.

Ultimately, bankruptcy is an established system of federal law, procedures, and regulations designed to protect the debtor and creditor. While it can certainly eliminate federal and provincial tax debt in certain cases, credit consolidation does not eliminate or deal with taxes. Credit consolidation has its advantages and disadvantages compared to bankruptcy. It allows you to get out of debt faster and it’s less damaging to your credit.

So where do I go from here?

If you are struggling with debt, bankruptcy and credit consolidation are two viable options to consider. A trained credit counsellor can evaluate your financial situation, carefully weigh the pros and cons of each option and help you find the best fit for your situation.

Ready to speak to one of our trained credit counsellors? Call us at 1-844-402-3073 or get started with our free online debt analysis.

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