Choosing Debt Consolidation over Debt Settlement or Bankruptcy to Deal with Credit Card Debt
When it comes to debt relief there are basically three options: Debt Settlement, Debt Consolidation, and Bankruptcy. This article discusses the considerations surrounding the option of Debt Consolidation.
Debt Consolidation Explained
Debt Consolidation is an avenue for debt relief and a number of non-profit agencies offer this service conveniently online. Some large ones worth mentioning are Incharge.org and moneymanagement.org. These companies are funded in part by public agencies and corporate sponsors, which by the way includes the creditors. The U.S Trustee office, component of the Department of Justice, lists Trustee approved credit counseling agencies in every state.
Debt consolidation combines all credit card debt into one monthly payment. This option may be right for people who cannot do a lump settlement but can afford to make payments over time.
Your Debt Consolidation Plan
The credit counseling agency reviews your income, assets, and expenses, and assists your with creating a budget. They work with the creditors to reduce interest, finance charges, and extend repayment time. Debtors considering bankruptcy can benefit by going through the debt consolidation process if for nothing more than to get a handle on their budget and learn whether this option is affordable.
Considerations & Caveats
- Is the budget realistic for you and your family? Does it create great risks by excluding expenses for important needs like: health insurance, disability insurance?
- Does the plan mean you must rob Peter to pay Paul by deferring payment of income taxes, child support, borrowing more from other sources?
- Is the repayment plan realistic as far as how long it will take to pay debts in full? If your repayment plan will take 7 to 10 years to complete? If so, under Bankruptcy you might use that same amount of time to start saving and working towards restoring your credit.
- Are there future anticipated decreases in income or increases in expenses that will make it impossible to actually complete the plan?
Debt consolidation works when the budget and repayment plan is realistic. Setting unrealistic budget will only result in failing out of the plan and a loss of valuable assets, which could have gone toward rebuilding the debtor’s financial well-being.
Kathryn U. Tokarska, Esq. is admitted to practice in State of California. Graduate of California Western School of Law in San Diego, California, Ms. Tokarska concentrated her legal studies in area of Bankruptcy, Estate Planning, Taxation, Securities Regulations, and Real Estate Finance. She has over fourteen years of experience working for major financial investment institutions, offering financial planning services, investment products, wealth building and preservation strategies. Ms. Tokarska holds a Financial Paraplanner certificate, was a licensed stockbroker, and is currently enrolled in an LL.M. in Bankruptcy/Finance at Thomas Jefferson School of Law.
For assistance, contact Tokarska Law Center online, by Emailing Us, or by phone (619) 285-1992. We are a FEDERAL DEBT RELIEF AGENCY. We help people file for Bankruptcy Protection under the Federal and State Laws.