There are many options people have when they are buried under a mountain of debt.
One of the most common options people look towards is bankruptcy.
Some may look towards bankruptcy as their very first option.
This can be a significant mistake because bankruptcy comes with a number of serious complexities.
When a person files bankruptcy they are venturing into a bankruptcy court and declaring a negative cash flow in front of a judge.
Additionally, bankruptcy will ruin a credit rating for a full decade.
When other options are available, it may be best to look towards these options as opposed to venturing into bankruptcy proceedings.
One of the better plans to explore is debt consolidation.
Some may be a little confused with this as well because they assume debt consolidation is the same thing as a consolidation loan.
It is not! Debt consolidation deals with a company managing your debt for you and working out a new payment plan with your creditors.
With a consolidation service, the service will discuss your payments with the credit card companies and other lenders.
They will seek to lower your monthly payments, your interest rates, and could possibly even settle a portion of your debt.
After doing this, the company will then issue payments on your behalf to the lenders.
You will then make one monthly payment to the consolidation service.
This single monthly payment is much less than the combined amount of the non-negotiated minimum monthly payments of all the credit cards.
If this all sounds a lot easier and a lot less difficult than filing bankruptcy, it is because it is.
It also will not damage your credit to the same degree bankruptcy would.
Also, the costs are much less.
That is why consolidation should be explored prior to looking into bankruptcy.