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Is debt consolidation or bankruptcy right for you?

Many people in Treasure Coast struggle with debt. With the car note and mortgage due every month and credit card and medical debts coming back to haunt them, it is no surprise that many people feel that they are in way over their heads financially. Bankruptcy and debt consolidation are potential opportunities that may help you to get control over your finances. However, you should take some time to understand them so you can determine if they really are appropriate for your circumstances.

Debt consolidation

Debt consolidation allows you to keep your financial situation private so you can protect your credit rating. It also makes it possible for you to still have access to your credit unless your debt consolidation agreement specifies otherwise. Consolidating your debt also enables you to enjoy the convenience of making one monthly payment instead of the many you are currently juggling. Debt consolidators are often able to negotiate lower payments, and in some cases better interest rates, on your behalf. They may even convince some of your creditors to settle for a lower amount than you originally owed.

You should be aware that many debt consolidation companies charge fees for their services. Instead of your full monthly payment going to your creditors, a portion goes to the company. As beneficial as this option seems, it can create tax complications for some people. For example, if your creditors decide to accept the settlement offer your consolidation company negotiates, then the amount of debt that is written off could be considered taxable income by the IRS.


Bankruptcy is often beneficial because there may be fewer lingering consequences. Although filing can have a negative impact on your credit profile for several months, or even years, after the debt is discharged, the effect is not permanent. Also, once you file for bankruptcy, an automatic stay goes into effect that puts an immediate end to harassing phone calls and demand notices. You do not have to pay taxes on any debts that bankruptcy discharges. The bankruptcy process is typically also much faster than consolidation if you owe a lot of debt, depending on whether you choose Chapter 7 or Chapter 13. Bankruptcy may seem like the more attractive choice, but the benefits are completely dependent on your specific situation.

You may be able to use debt consolidation or bankruptcy to get control over your finances, but you should assess your entire situation before you make any decisions. You should also take steps to improve your money management skills. If you are having trouble paying your bills and struggling with your debt, you should consider speaking to an attorney about your circumstances to learn more about your options.

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