The Benefits Of Debt Consolidation Over Bankruptcy

With today's financial economy, some consumers are having big financial issues. This is particularly true as the unemployment rate climbs and many employees are being asked to accept salary concessions. While bankruptcy should be seen as a last option, many consumers select the bankruptcy option far too soon, often without considering possible alternatives.

There are various alternatives available to you if you are deep in debt and do not wish to declare bankruptcy. The choice that should be studied by most anyone in this position is debt consolidation. This choice is often omitted and provides the preferred benefits of getting your financial position back under control without having to put up with the long-term negative impact of declaring bankruptcy.

But notice that there are two different types of debt consolidation - a debt consolidation LOAN as well as debt consolidation SERVICE or PROGRAM, and these are two significantly different matters.

A debt consolidation loan is where you take out a new personal loan and apply the funds to pay off your outstanding debts. This is advantageous from the perspective that your outstanding and overdue bills are paid off, as well as allowing you to save a ton of money in late charges and interest because now you have just ONE loan to pay back.

The risk in this solution is that the lender seldom checks to make sure that you have actually used the loan money for debt consolidation purposes. Yes, that's what you told them when you applied for it, but that doesn't mean that that's what you're going to use it for. The temptation, when having that money in your wallet, is to get that big screen TV or take that European vacation, and postpone the bill paying for some other day. Applying the money that way is going to get you into even greater trouble in the near future.

In contrast, a debt consolidation SERVICE or PROGRAM is clearly designed for the purpose for which the name implies it to be. You turn your debts over to the service or program and they talk terms with your lenders to lower your interest rates and lower your monthly payment amounts. You make one payment each month to the debt consolidation service, and they in turn make the payments to each of your creditors.

This is a large difference. With the service, your debts are not all paid off, but they are indeed caught up and brought up to date. If you miss your payment to the service, then they do NOT make the payment to your creditors. But the tremendous advantage is that your monthly hard cash outlay to pay your bills is decreased drastically from what it was before, and this gives you the financial room you require to get your ducks lined up again financially.

Irrespective of which of these two types of debt consolidation you opt for, both are better than bankruptcy and can help you back on the proper financial track quickly.
For more insights and additional information about Debt Consolidation loans or services, as well as getting a free online debt consolidation quote, please visit our web site at http://www.debtconsolidationstrategies.com