Use Debt Consolidation Loans Before Considering Bankruptcy

By: Jon Arnold

Although it is difficult to explain, some people seem to be very good at getting further and further into debt, and not seeming to make any headway towards getting on top of their financial obligations. Many times, this starts with a person when they get into some type of situation which is usually not even their fault but causes a major financial burden to be put on their shoulders, such as a job layoff, a divorce, unexpected high medical expenses, etc. From that point on, they are treading water in best case, and often sinking deeper into debt every month.

The average person hates to admit they are having financial troubles. Much of it is a pride thing, but for the sake of keeping their pride intact, they continue to make unfortunate financial decisions. They start taking out cash advances on their credit cards or paying much of their debt with credit cards, until those credit cards have reached their credit limit. Since their financial situation has not yet become apparent to the credit bureaus, they are able to get approved for some additional credit cards, and in short order, they too become maxed out.

It is only a matter of time before this financial house of cards starts to tumble, and when it starts going downhill, it will pick up speed faster than a snowball on a mountainside. More debt like personal loans are not an option, and at this point are rarely available even it that was a viable option, which at this point it is not.

Many people in this situation start to seriously consider bankruptcy, but with the new bankruptcy laws, they don't realize that they may not even get approved to file bankruptcy. Yes, you need APPROVAL to file bankruptcy, it is not something you can do on a whim. Check out for more details about filing bankruptcy.

The most viable option for people in this situation is debt consolidation. A debt consolidation loan can take care of your debts but it is not filing bankruptcy. What happens is that you turn your financial obligations over to a debt consolidation company, and they pay your debts for you via a debt consolidation loan. This is not a loan where you get cash in hand, but rather it is a loan on paper and instead of making umpteen payments each month to each of your creditors, you make only ONE payment each month to the debt consolidation company.

At first glance it may not appear that this would help you but it does. One thing it does is lower the total monthly amount of money you are paying out each month. If your total monthly outlay previously was $3500, the payment on your debt consolidation loan might be $2200, which gives you $1300 per month of financial breathing room. Another thing this does for you is not tarnish your credit report and credit score. As long as you are making timely payments to the debt consolidation loan company, your financial obligations are being paid on time, and the credit bureaus will reflect the fact that you are making timely payments on each of your debts.

If you need some financial breathing room and understand that bankruptcy should be your last resort, consider a debt consolidation loan to keep your head above water until you can get back on your feet again.

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