Debt Consolidation vs. Bankruptcy
Pooling all your debts into one payment at a lower rate sounds like a good
solution. Don't be fooled. Most debt consolidation programs do not
work. In fact, most debtors who go that route end up in worse financial shape.
The Sulaiman Law Group, LTD., is committed to foreclosure relief and debt
solutions. For many of our clients,
bankruptcy is the best solution or the only viable one. For other clients, alternatives
such as loan workouts or debt settlement may do the job. But debt consolidation
is almost never a wise move.
Contact us online or call our office at 312-313-1613 for answers to your questions about
bankruptcy and debt relief options.
Debt Consolidation vs. Bankruptcy: Which Is the Right Path to a Fresh Start?
Debt consolidation is usually a scam, or a fruitless exercise at best.
Why is consolidating your loans and debts a bad thing?
- Most outfits charge steep upfront fees and/or high monthly fees, offsetting
any savings from lower interest rates.
- Most debt consolidators do not negotiate any discount of the amount you owe.
Creditors do not have to honor the plan. You can still be subject to late
fees, interest, negative credit reports,
harassing phone calls and collection actions.
- Many people have trouble making the huge monthly payment.
Consolidations often mix
secured and unsecured debts.
The bottom of line is that most debt consolidation plans do not get you
out of debt.
Tom and Katie* had medical, credit card and judgment debts totaling $80,000.
They paid $2,500 to an agency that promised debt freedom without the downsides
of bankruptcy. Despite making $1,000 monthly payments for five years,
they are still dealing with $25,000 in unsecured debts, ruined credit
scores and harassing phone calls.
While not a magical cure,
bankruptcy offers numerous advantages over debt consolidation:
- Bankruptcy actually eliminates or reduces the debt.
- Debts covered by bankruptcy do not incur interest, penalties or delinquencies.
- The phone calls and threats stop immediately.
- Bankruptcy suspends foreclosure, repossession and wage garnishment.
In appropriate cases, our firm can negotiate debt settlements with creditors
in lieu of bankruptcy.
Get the Facts and Make an Informed Decision
If you are considering debt consolidation, or if consolidation loans have
not helped your financial crisis, talk to the Chicago bankruptcy lawyers
of Sulaiman Law Group, LTD. We regularly help individuals with high incomes
and substantial debts get back on track.
Contact Sulaiman Law Group, LTD. online or call
312-313-1613 to arrange a consultation.