The Benefits of Debt Consolidation Over Bankruptcy

In today's financial economy, many consumers are having major financial problems. This is especially true as the unemployment rate climbs and many workers are being asked to accept salary concessions. While bankruptcy should be considered as a last resort, many consumers choose the bankruptcy option way too early, frequently without considering viable alternatives.

There are various alternatives available to you if you are deep in debt and do not want to declare bankruptcy. The option that should be considered by virtually anyone in this situation is debt consolidation. This option is often overlooked and provides the desired benefits of getting your financial situation back under control without having to endure the long-term negative affects of declaring bankruptcy.

But note that there are two different types of debt consolidation - a debt consolidation LOAN and debt consolidation SERVICE or PROGRAM, and these are two very different things.

A debt consolidation loan is where you take out a new unsecured loan and use the funds to pay off your outstanding debts. This is beneficial from the aspect that your outstanding and overdue accounts are taken care of, 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 off.

The danger in this solution is that the lender rarely checks to make sure that you have actually used the funds for debt consolidation. 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 hand, is to get that big screen TV or take that Mexico vacation, and leave the bill paying for another day. Using the money that way is going to get you into even deeper trouble in the near future.

By comparison, 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 negotiate with your creditors to lower your interest rates and lower your monthly payments. You make one payment each month to the debt consolidation service, and they in turn make payments to your creditors.

This is a huge 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 huge advantage is that your monthly cash outlay to pay your bills is reduced drastically from what it was before, and this gives you the financial room you need to get your ducks lined up again financially.

No matter which of these two types of debt consolidation you choose, both are better than bankruptcy and can get you back on the right 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

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