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Credit card consolidation – Is it better than Chapter 13 bankruptcy?

As far as debt relief options are considered, debt settlement and credit card consolidation are taken as the two options which are best for you to relieve yourself of the stress of debt. However, another great option to start your life anew and discharge off the debts is bankruptcy. There are actually a great number of people who file bankruptcy just to get out of debt. But, it is also important for you to know that bankruptcy lowers your credit by several points. On the other hand, if done tactfully, credit card consolidation helps you in improving your credit.

Deciding on which is the better option

In actuality it will depend on your financial condition, your job, your expenditures and your debts as to which will be the better option for you to pay off your debts. If you are in a steady job and if you are still having problems in handling the debt payments because you have several credit cards, it would be better for you to first try out credit card consolidation.

Consolidation helps you rolling over the several debts that you have as a single debt and also lowers the interest rate on the debt. Thus, it becomes easier for you to manage the payments as you are required to make a single payment each month rather than making several payments on the several credit cards that you have. As you make the payments on the consolidated credit card or loan, you will see your credit improving. But, you will have to keep in mind that you should not close down other accounts, all at the same time to avoid dinging your credit.

On the other hand, if you have been laid off and if there are no chances of recovery, if you don’t even have the money to sustain yourself properly after making the debt payments, it would be better for you to file bankruptcy.

Bankruptcy filed under Chapter 13 helps you in retaining your assets (the bankruptcy trustee won’t liquidate the assets to pay your creditors) and provides you with the option to make payments as per the repayment plan set legally by the court. The court in general sets the repayment plan based on your affordability. While making the payments through bankruptcy repayment plan, you may also be able to try and improve your income through different money making options.

Author’s Bio: Martha Jackson loves to write financial articles and she is a contributory writer associated with the Debt Consolidation Care Community and has written several articles on debt consolidation, debt settlement and get out of debt for various financial websites. She holds her expertise in the Debt industry and has made significant contribution through her various articles.