Which is better Bankruptcy or Debt Consolidation?

By Rochelle Belnap, The Arizona Credit Law Group, PLLC

Everyone has debt, and sometimes it is overwhelming. You don’t just wake up and decide to stop paying your bills. Instead, life events like having kids, losing a job, getting sick, and getting divorced interfere. When this happens, you think “what are my options?”

Debt Consolidation

Any good bankruptcy attorney will tell you to file bankruptcy (it’s what they do). In many cases, they are right- especially when you qualify for Chapter 7 bankruptcy.  This will eliminate most debt, like credit cards, medical bills, judgments, taxes, etc.  You pay the costs associated with filing, like attorney fees, filing fees, etc.

Sounds great right? But bankruptcy is tricky because you need the funds before you file. The low end will cost roughly around $2,000- and if you have that laying around you are probably not considering bankruptcy.

So now what?  How about debt consolidation? It is debt settlement that allows you to pay the attorney representing you and your creditors over time, from months to years.   This is also a good choice.  But what is the right choice for you?

Here is your mini checklist:

  • Do I have enough debt to file bankruptcy? In general, your debt should be more than what you earn in a year. If this is the case, then make sure your debts can be discharged through bankruptcy. For instance, student loans tend to survive bankruptcy- so even if you file, you still have to pay :/
  • Do I really owe all the money? There are debts that you no longer owe because it expired, or you paid it, etc., so consult with a professional to determine your actual liability.
  • How long will it take? A chapter 7 can take a few months, but a chapter 11 or 13 can last from 1 to 5 years. Different debt consolidation methods can take a few months and others 3 years.
  • How much will it cost? Tally up how much you are paying the attorney, paying the creditors/debt collectors, and how much time you have to pay, then compare both options.

The consultations for both types of attorneys tend to be free, so get the information you need to make the best choice for you!

Good luck and thanks for reading!


Debt Consolidation - tempe credit attorney
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My firm has 3 goals – be cost effective & efficient, make complicated things simple, and change the way people think about attorneys. We do this by offering flat rates with payment plans, educating our clients, and by encouraging everyone to ask us questions to better understand what we do & why we do it. I am a credit attorney and I love helping people with debt and credit legal issues.

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