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Bill Consolidation vs. Bankruptcy

Debt can cause a person or companies to get in over their heads in what are called “bills.” In the case where such bills cannot be paid on time, due to economic downturns, or other hardship factors, something else must be done. One option is to file for bankruptcy. But is it actually as simple as it sounds?

If you file for bankruptcy, you are, in essence, declaring that you no longer have the money to pay for whatever it was you signed on to pay for over time. This would seem like a good thing, right? WRONG. In fact, although this filing can rescue you from a current debt entirely, it also declares that you are NOT credit-worthy. Therefore, you are filing that you cannot pay your current debt and are agreeing to be ineligible for any future credit agreements.

If you file for bankruptcy, you will have to thereafter cover all your “bills” at the time of purchase, not later, not over time. Now, if you’re buying a pack of gum or maybe even groceries for a week that will work for most people. But try that trick with a house, or car or sending your kid to college‚Ķpeople generally don’t carry thousands around in their pocket and, if you’ve got that in the bank, it’s probably considered “frozen funds,” pending investigation as to why you filed for bankruptcy in the first place. It’s a sticky business, filing bankruptcy.

The other alternative is bill consolidation. Bill consolidation can be defined as “a temporary solution to a temporary problem.” Bill consolidation refers to the act of combining current bills or notes of promise to pay something off into one total debt. Bill consolidation is a reasonable alternative to either being listed as a bad credit risk due to owing the money or to the fact you’ve filed for bankruptcy. Bill consolidation lets you get your finances back on track while protecting your credit rating.

If you choose to consolidate your bills, you agree to still pay your bills over time but with the bill consolidation, moving the debt into one “location” allows you to be responsible for only one charge. There are various agencies, both free and paid that can help you rebuild your credit through bill consolidation. They’ll usually walk you through the process of establishing a dialogue with your creditors so that everyone will understand you’re making a real attempt to get your payments made via your bill consolidation plan. In the case of interest on a debt, you’re then only liable to pay for one interest debt, instead of many.

This combining of interest payments usually causes the new interest agreement to be much lower and therefore, manageable. If you’re in debt to where you can no longer make payments to your creditors, don’t be sucked into the financial bankruptcy spiral of bad moves for bad situations. Get yourself on track again with bill consolidation. Your bank will thank you and so will your creditors.

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