Financial crises can lead people into situations like choosing between debt consolidation and bankruptcy. Choosing between debt consolidation and bankruptcy can be a major decision with multiple pros and cons. Exploring the pros and cons of both options may help you decide which choice is right for you. Reach out to a Tullahoma bankruptcy lawyer to start this process today.
Bankruptcy Vs. Debt Consolidation
Many people know about how bankruptcy can wipe away debt, but not everyone knows about how debt consolidation works. Debt consolidation offers you a lower monthly payment with a lower interest rate. This requires you to combine all your debt into one monthly payment instead of separate monthly payments.
You have several options to choose from for debt consolidation and bankruptcy. Debt consolidation can be done through a debt management program, debt consolidation loan, transferring all debt to a single credit card, secured personal loans, or by doing this yourself. The do-it-yourself method requires reaching out to each of your creditors to ask for a lower interest rate yourself or through a credit counselor.
Types of bankruptcy for personal finances include Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy erases debt by selling off certain things you own to pay off debt. On the other hand, Chapter 13 bankruptcy turns all your debt into a new monthly payment plan with lower monthly payments and a lower interest rate.
The cons of bankruptcy include a lower credit score for about ten years and having to give up certain properties to erase your debt. Bankruptcy also does not erase every type of debt. You may still have to pay alimony, taxes, fines, and student loans. However, the pros of bankruptcy are escaping your primary debt much faster.
The cons of debt consolidation include creditor harassment continuing during this process, the risk of running into scams or false promises, a lower credit score, and creditors suing you. The pros include the possibility of working with creditors to pay off debt more efficiently and avoiding bankruptcy.
How Can a Lawyer Help Me?
A bankruptcy lawyer can help you navigate the complex processes of debt consolidation or bankruptcy. An experienced lawyer will know about debt settlement red flags to help you avoid being scammed. Common red flags from debt settlement companies include exaggerated promises, claims that creditor lawsuits can be stopped by their company, and charging fees before settling debts.
Not only can a lawyer guide you through these complex processes, but a lawyer can also answer your questions. A lawyer will be able to help you assess all your legal options along with the pros and cons to help you make the most informed decision based on your situation.
Contact Tom Bible Law for Legal Help
Figuring out whether to file for bankruptcy or go through debt consolidation can be a confusing decision to make. Do not hesitate to contact us at Tom Bible Law by dialing (423) 424-3116 for a consultation today. Our legal team of Tennessee bankruptcy attorneys can help you figure out all your legal options given your financial situation. We can be found throughout the Tennessee cities of Chattanooga and Tullahoma.