Which is the better choice?

Due to the overwhelming amount of consumer debt that scores of people take on these days, many, at some point, are forced to make a decision about their financial situation. This decision can often rest on one of two choices: bill consolidation or bankruptcy. Making a choice between these two options isn’t easy and should not be taken lightly. While bill consolidation works wonders for many, some people may actually benefit more from filing bankruptcy.

Bill Consolidation

Bill consolidation allows you to combine multiple debts into a single loan with one monthly payment. If you have various credit cards and loans, this can be a convenient way to help organize and pay off your debt. This option will also help to repair and prevent further damage to your credit by allowing you to pay back all of your creditors and establish a new record of consistent payments. This can be particularly helpful if you have had a history of late or missed payments. It is also possible that you could obtain a lower interest rate than what you currently have on some of your bills, which will help you to save more money over time. The only real disadvantage to a bill consolidation loan is that there is no immediate debt relief and you are still responsible for paying the sum of your debts.


Filing a Chapter 71 bankruptcy helps people who can no longer pay their bills get a fresh start by releasing personal liability from most of their debts. This may sound like a quick and easy way to provide liberation from financial distress; however, there are a few potential drawbacks and long term consequences to choosing bankruptcy. First, a debtor must meet certain qualifications to even be eligible to file for a Chapter 7 bankruptcy and these have gotten tougher to meet over the last few years. Secondly, if you have any high-value assets, it is very likely they will be liquidated to help cover some of your debt before the rest is discharged in your bankruptcy. There are a few types of debt, such as student loans, restitution and child support, that are simply not able to be discharged with a bankruptcy. One last thing to take into consideration is the fact that filing for bankruptcy will remain on your credit report for the next 7 years, which can complicate any future financial decisions that you may need to make. If you feel that you might possibly benefit from financial resolution through bankruptcy, you can find specific bankruptcy qualifications and more detailed information through state and local government websites.

For those who have some form of income and assets that they don’t want to lose, bill consolidation may be a better choice as a way to manage their unorganized and, seemingly, unmanageable debt. Consulting with a financial institution is a great first step to getting more information about how a bill consolidation loan might work for those in that situation. Alternatively, bankruptcy may be a good option for those who have suffered an injury or accident that has left them with a large amount of medical bills, or those who have had an unexpected job loss and have absolutely no source of income to take care of their financial obligations. Seeking the advice of a qualified legal professional will help those individuals in these or similar circumstances take the proper steps needed when approaching financial relief through bankruptcy.

As you can see, each option has its own advantages and disadvantages, but both can provide a significant amount of financial assistance depending on the specifics of your personal financial situation. When choosing which step towards financial relief is right for you, the most important thing is to become more knowledgeable about how each solution may help or hinder your own personal situation. Once you have all the facts, you can then make a more informed decision about your financial future.


  1. ^ "." United States Courts. Administrative Office of the United States Courts , Web. .

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