Which is a more effective way to reestablish your credit, bankruptcy or debt consolidation?
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Debt consolidation is the best way to go. Bankruptcy is a way to completely clear your debt out if you file Chapter 7, but you will have essentially ruined your credit for 7-10 years. Don't do it unless it is your last resort!! Debt consolidation (I'm not sure which type you are referring to) will help you build credit back up if you are able to work out affordable payments that you can consistently make on time. Try calling a credit counseling service (such as CCCS) if you are overloaded with debt and aren't sure how to proceed. Don't file bankruptcy unless you are prepared to pay sky high interest rates for (or possibly get turned turned down for) mortgages, cars, or any other type of credit product for the next 7-10 years.
either way may hurt your credit but bankruptcy if much much worse. You can re-establish credit after a bk, but you will pay much higher rates than going through debt consolidation. With the new bankruptcy law passed in Oct 05, you have to go to a consumer credit counseling program first anyway. If you do end up having to file for bk, try to re-affirm your debts with your financial institution that you use. They want to maintain the relationship and may work with you better than some creditors (this is especially true with a credit union).
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There is no way to answer that question without getting more info!
Bankruptcy will definately kill your credit. Debt colsolidation will hurt, but if done correctly it won't do as much damage.
Before you even start thinking about bankruptcy, check out the link below to see if you even qualify, and if you really think it's going to help you out.
If you decide on debt consolidation, take this warning! You must stop using credit and start a very strict budget, or you will end up in bankruptcy court anyway.
Over the past few years, creditors have advertised debt consolidation as a quick and easy way to get out of trouble. Them the people went right on and charged up more credit cards!
Last year, thousands of people filed for bankruptcy for that very reason! Don't be fooled into thinking it's going to help you unless to take my advice! Get a grip on your finances!
If you think it's bad now, wait until you file bankruptcy, and they put you on a "bankruptcy plan" with the trustee. Forget entertainment and eating out. Get used to lower thermostats to conserve energy. Say goodbye to the cable-tv. It's 3 to 5 years of extreme budget control! Two-thirds of the people placed on Chapter 13 budget plans fail, according to recent figures.
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