Debt Consolidation

Debt consolidation is process in which you consolidate all of your outstanding account balances into one large balance and then make payments toward paying off your total balance.  Most lawyers agree that consolidation is the least favorable choice of your bankruptcy alternatives.  It is a disfavored remedy.  In fact, depending upon your circumstances and the amount of your total outstanding account balances, it may simply a bad idea to attempt debt consolidation.

Almost without exception, when one of our clients tells us that they have attempted debt consolidation in San Diego, they ended up nowhere with the consolidation process and only end up delaying their bankruptcy filing.  The reason for this is that when you consolidate your debts you often end up paying only interest charges and fees to the consolidation company (they have to make money somehow), and after a couple of years you find yourself in the same situation you were when you started.

Debt consolidation can actually put you in a much worse position than when you start the debt consolidation process.  After a couple of years when you are looking back you will realize that had you filed bankruptcy instead of attempted debt consolidation you could have been rebuilding your credit and have a much better credit score!  

In comparison, debt settlement is usually a much better option.  With the settlement process your account balances are settled in full and that way you will not end up in a situation in which a couple of years later you still owe the same amount.  Rather, you will owe nothing because the debt is settled in full. Hence, most attorneys are in agreement that settlement of account balances is a more favorable remedy than consolidating them.

And, chances are, if you attempt debt consolidation, a few years later you’ll end up filing bankruptcy anyway.  You might as well hire a bankruptcy attorney now and eliminate your debts and get a fresh start.  You can begin rebuilding your credit today and be on your way to a better credit score.  

If you have heard about debt consolidation and are considering pursing a consolidation as an alternative to bankruptcy relief, you should first talk to a lawyer and review all of your other San Diego debt relief options.  Talk to an experienced bankruptcy attorney who can explain all of your options to you and help guide you make the best financial decision for you and your family.

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