Debt Consolidation Program versus Filing for Bankruptcy

When looking for relief from creditors or overwhelming debt, you are at many times either presented with a debt consolidation program or filing for consumer bankruptcy.

Now, what are the main differences between the two?

Debt consolidation combines multiple debts (usually credit cards, personal loans, mand edical bills) into one new loan or payment.

In debt consolidation, you repay 100% of what you owe back with simplified payments monthly and reduced interest through the program, with no court involvement. Some may say the benefits are: one monthly payment instead of many, it may lower interest rates, less damage to your credit, no public record, and you keep your assets. 

However, there may be downsides such as, it requires decent credit, total repayments to creditors may be higher due to long term disbursements payments to those creditors, and any missed payments may face collection and legal actions against you. You do not have legal protection from creditors in these programs!

Consumer Bankruptcy is legal process that can eliminate or reorganize debt under federal law, supervised by a bankruptcy court. You may pay some, all, or none of the debt, depending on the chapter you qualify. There is a protection of automatic stay placed once you file, which immediately stops collections, lawsuits, garnishments and foreclosures.

Main types of Consumer Bankruptcy:

1. Chapter 7: Wipes out most unsecured debts (credit cards, medical bills)
2. Chapter 13: Court-approved repayment plan (3–5 years), then remaining eligible debt is discharged

Filing for bankruptcy in Minnesota can eliminate large amounts of debt, provide you immediate relief from creditors, may stop foreclosure or repossession (depending on which chapter you file), and there is a clear path and outline each step of the way to a fresh start; a clear legal endpoint and a fresh start.

CALL NOW FOR A FREE STRATEGY SESSION FROM AN MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM

With LifeBack Law Firm, P.A, we are with you each step of the way. From the first free initial consult to helping you gather information needed to put your case together, through the court filing, and even through a credit repair program to get your LifeBack after filing, we are there with you. With the right legal team, the process can be simple. Whenever you are ready to start the bankruptcy process or explore your options, reach out to Minnesota’s kindest and most helpful bankruptcy law firm at www.lifebacklaw.com. You will be so happy you did!