Is Debt Consolidation Considered The Same As Bankruptcy
You may possibly already be aware that I am usually lookout for top quality information and facts on government debt consolidation loan and related debt consolidation loans getting tips and techniques, knowing that loan consolidation is an important part of our wish to live without worrying our financial future. These days again, I came across a pretty excellent post that discusses debt consolidation from a distinctive light. Make sure you read the entire report and give your valuable comments. Today’s article is on “Is Debt Consolidation Considered the Same as Bankruptcy?” and you are able to uncover full guide published below for your convenience.
Is Debt Consolidation Considered the Same as Bankruptcy?
The financial industry is like any other industry in that it has its own language or jargon that financial professionals use to communicate with each other.
To the average person, much of the lingo used in the financial world has either no meaning or it is assigned a general meaning that usually does not apply to the term.
Aurora Lillo Editor of the “Best Debt Consolidation Services” website — http://www.BestDebtConsolidationServices.net — pointed out;
“…For example, many people do not know the difference between a standard interest rate and an APR rate. Explaining some of these terms to people could take a while, and in the end the knowledge they would have gained would probably do them no good anyways…”
But some terms are important because they can appear in anyone’s life and affect them in many ways. That is why it is important to understand the difference between terms such as bankruptcy and debt consolidation.
Bankruptcy is the legal process of basically saying that your overall debt greatly exceeds your income and you see absolutely no way that you will be able to pay off that debt. The bankruptcy courts look at your situation and determine how much each of your creditors will get paid.
In some cases a creditor may be awarded their full amount, in other cases a creditor may get nothing. There are several different kinds of bankruptcy, but that is a very general overview. Bankruptcy damages your credit for many years, and it can take a lot of hard work to climb out of bankruptcy and start over.
Debt consolidation is very different than bankruptcy. Consolidation is the process of taking your high interest rate credit accounts and combining them under one low interest rate loan.
It is actually the direct opposite of bankruptcy as debt assistance helps you to stop the damage any of your credit accounts are doing, and it allows you to begin rebuilding your credit score over a short period of time.
“…Bankruptcy is referred to as the last resort when it comes to getting your financial situation under control. Long before you consider bankruptcy, you should take the time to meet with a debt expert and see what kind of programs they can offer you that would help you avoid ruining your credit for years and get you back on the path to financial recovery…” added A. Lillo.
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The main types of personal debt are secured debt, unsecured debt, revolving debt, and mortgages. Secured debt requires some form of collateral, while unsecured debt is solely based on an individual’s creditworthiness. A credit card is an example of unsecured revolving debt and a home equity line of credit is a secured revolving debt.