If your financial situation becomes unmanageable, you may be trying to figure out what options you have to get to a better place financially. Many people turn to either debt consolidation or bankruptcy as a way to manage their financial situation and move toward a more stable financial future.
Every person’s financial situation is different. Before choosing what to do in your financial situation, it is important to understand the difference between debt consolidation and bankruptcy which is explained below. However, the best way to get your questions answered on what would be best for your specific financial circumstance is to speak with a skilled Atlanta bankruptcy attorney who understands the implications debt consolidation or bankruptcy can have on your life.
Debt Consolidation
Simply put, debt consolidation means combining all your debts (assets, credit cards, loans) into one large lump sum—then you make monthly payments to that debt. The purpose of combining all your debts is to help you get a lower interest rate and have just one amount to worry about. Debt consolidation is usually accomplished in either one of two ways, 1) by using a consolidation company, or 2) using your home as collateral.
- Consolidation Company: When you consolidate your debt using a debt consolidation company, the company simply gives you a loan that is used to pay off all the debt to your various creditors. Then, you make monthly payments to the consolidation company. A consolidation company can make promises to lower your debt and deal with your creditors, but they do not always follow through.
- Using Your Home: Another way to get the money to consolidate your debts is to use your home as collateral and open a home equity line of credit or second mortgage. While this does combine your debt into one location, it puts your home at risk if you miss future payments.
Before you decide to consolidate your debt, speak to an experienced bankruptcy attorney who can help you understand all available options and determine what is best in your situation. Debt Consolidation does have its cons and can cause further financial problems or put you at risk of losing your home, so this decision requires careful consideration.
Bankruptcy
Bankruptcy differs from debt consolidation because the goal is to either discharge or wipe out, your debts (Chapter 7 bankruptcy) or help you create a debt repayment plan (Chapter 13 bankruptcy). One of the main advantages of a bankruptcy is the ability to have a fresh financial start—a bankruptcy automatically stays debt collect, repossessions, and wage garnishments, and eliminates overwhelming debt or gives you time to repay part of your debt before the rest is discharged. Depending on your personal situation, bankruptcy may be the best option for you.
Get Your Bankruptcy Questions Answered
Trying to determine what the best option is for your financial situation can be difficult, especially when you are simply fighting to stay afloat. By speaking with a skilled bankruptcy attorney at The Ballard Law group, you can get your questions answered about how bankruptcy could be the right answer for you and see how a knowledgeable attorney can assist you along the way so you don’t have to face it alone. Your first consultation is always free, so contact our office at (404) 800-9939 to schedule yours today!