Debt Consolidation - Better Than Bankruptcy

By: Gracy Bonsu

Many people file for bankruptcy to get rid of their debts and liabilities. But, you should consider this step only as a last resort. If you have any hope of recovering and coming back on the financial track, then bankruptcy is not for you.

There are many other debt solutions for people who are bearing the brunt of heavy debt repayments every month. If you are in a grave debt situation, debt solutions like an Individual Voluntary Arrangement, Administration Order and Debt Management Plans can save you from going bankrupt. No doubt, bankruptcy also protects you from the creditors and permits you to start afresh but there are many long-term consequences that can have very harmful effects on your financial standing.

Once you file for a bankruptcy application, all your belongings come under the charge of trustees. Your credit history goes in the air for as long as ten years. There is very less possibility of getting a loan in the future. On the other hand, debt consolidation loans allow you an opportunity to recover while maintaining your monthly repayments. No debt is reduced in case debt consolidation. Only your existing debts are converted into a single debt.

You can reduce the monthly outgoings by taking out debt consolidation loans. The repayment duration and overall interest payments may increase in the process. But, you will get time to bring things under control. Debt consolidation loans are particularly beneficial when you know that after sometime down the line, you will have stronger financial capabilities. Your financial standing remains intact in this case.

Lenders all over the UK offer debt consolidation loans. These loans can be taken out against your home or on the basis of your monthly income as well. If you need a more than ?25,000 of loan then you will have to offer your home as a security to the lender.

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