In the financial world, there are some options that are much worse than others in terms of leaving you in a financial mess. When you are in over your head with credit card debt, you can get very frustrated and you can look for answers in a lot of different places. Some people might tell you that bankruptcy is a way to get out of debt, while others will talk about how consolidation is a good option. Which one of these is worse for your financial future? Which option will leave you with the most to deal with once all of the smoke has cleared and you are finished with the process?
The simple answer is that bankruptcy is much worse for your credit and for your financial future. When you declare bankruptcy, you are not even going to get out of paying all of your bills like in the past. Some of the laws have changed and many people are still required to pay their debts, so bankruptcy is no longer a get out of debt free card. The more important implications come after the fact, though. Bankruptcy is the worst thing that can go on your financial record and it will set your credit back for a period of seven to ten years. People with this on their record cannot get a loan of any kind for that period and it can impact your ability to get jobs, as well.
With consolidation, the consequences are not nearly as dire. You will suffer a bit of a hit on your credit report, but that will be balanced out by the positives that come from consolidation. Your score will eventually recover, because you will be getting out of debt more quickly and you will quit missing payments like in the past. Creditors will see that you have made an attempt to get organized and to pay your debts off in the right way.
For those people considering the alternatives out there, it really is not much of a debate. If you are smart, you will consider consolidation over bankruptcy.
With the way that today's laws are structured, there is no reason why anyone should go through a bankruptcy proceeding. With the ease of consolidation and the number of companies that will work with you in that effort, it becomes a no-brainer of sorts of people with very real debt needs.
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