We’ve all seen or heard commercials advertising debt consolidation as the ideal way to escape financial difficulty. Have trouble paying your bills? Call us to fix all your problems! But while the actors in these commercials are overjoyed after one call, debt consolidation often is not a long term solution.
Many debtors turn to debt consolidation as a way to get out from under bills that cannot possibly be repaid to avoid having to deal with the B word—bankruptcy. Bankruptcy is a scary term with a lot of negative connotations. People do not want to be bankrupt, so consolidating debt seems like a much more palatable solution. Debt consolidation, however, often just delays a bankruptcy filing. In the meantime, the debtor’s credit has been ruined and the payments were burdensome to the point that basic needs cannot be met.
People want to repay their debts and meet all their obligations, but repayment needs to be practical, not aspirational. Commercial debt consolidation plans rarely recognize this and prioritize the creditor’s desire to be repaid over the debtor’s ability to do so. In addition, debt consolidation plans often do not stand up to wage garnishments, accounts being frozen, or lawsuits. The company may respond to requests for assistance with “Not my problem.” So even after debt consolidation, a debtor may not be able to make ends meet and will file for bankruptcy anyway.
Bankruptcy is almost always the better option. It is government-sponsored debt relief and exists primarily to help the debtor. Creditors must abide by the decisions of the bankruptcy court. Plus, when an attorney is retained to file the bankruptcy, he or she can also address things like wage garnishment that debt consolidation companies will avoid.
When the time is right, or when you are ready, reach out to Minnesota’s NICEST bankruptcy law firm at www.kainscott.com. You will be glad you did!
