Crushing Credit Card Charges: Debt Consolidation Loans Versus Declaring Bankruptcy

Debt may feel like a dead-end as you frantically search for a way out. However, while collecting interest can take a toll on your long-term financial plans — fueling a storm of stress and worry — the good news is that you’re not alone. The truth is that approximately 80 percent of Americans have some form of debt, and the average credit card debt in the United States totals up to $5,313, according to a 2020 Experian credit review.

Whether your balance is higher or lower than average, it can still be easy to feel ruled by a credit score that could potentially turn lenders away from approving a loan application or affect your ability to qualify for a mortgage.

What’s the upside to all this bad news? Given that you may have credit card charges you can’t seem to shake, there are a few different options that could help relieve some of that financial stress and get you back to living a debt-free life.

What is Debt Consolidation?

Considering that the average American has four credit cards, it can be easy for debt to accumulate over a span of open accounts, creating high-interest rates and an assortment of due dates that get lost in a sea of other responsibilities.

A debt consolidation loan remedies this problem by doing exactly what it sounds like — merging various debts into one single monthly payment. The only catch is that often the debtor must offer an asset as collateral, such as a car or house, in exchange for the loan.

Additionally, while this option does allow you to pay off your debt, a debt consolidation loan is not an end-all solution to your problems, considering that you can still build more debt and fall behind on payments. Therefore, if your spending habits stay consistent or your financial struggles stretch beyond your dues, this option might not be the right choice.

When a Loan Won’t Suffice

Perhaps the idea of a loan doesn’t sound any better than the debt you’ve already racked up, or altering the debt structure isn’t going to cut it when it comes to clearing your name and building back your credit score.

That’s where filing for bankruptcy comes in. While it may sound counterintuitive at first, the truth is that “individual debtors receive a discharge in more than 99% of chapter 7 cases,” according to the United States Courts. Another benefit is that with chapter 7 bankruptcy, most of the client’s assets will be protected due to exemption laws.

Additionally, while a debt consolidation loan may take years to clear as you watch your savings dwindle down to nothing, filing for bankruptcy includes the benefit of discharged debt within a matter of months to put both you and your bank account at ease.

Therefore, while declaring bankruptcy may sound like an overwhelming option for getting out of debt, the choice will actually provide you with lasting relief by means of a fresh fiscal start. Debt consolidation, on the other hand, may require some significant lifestyle changes that could add stress rather than take it away.

Find Financial Freedom Today

Deciding how to handle your debt can be a hard choice, especially without any guidance from professional help. After all, credit card debt can be a daunting matter. Only, it doesn’t have to be — especially when Dolaghan Law is here to help.

Here at Dolaghan Law, we will walk you through the process of declaring bankruptcy so that you can regain your financial freedom with ease. Also offering services in foreclosure prevention, credit repair, and loan modification, our law firm is dedicated to providing you with relief from the chains of monetary struggle.

Thus, If you are searching for an escape from debt, look no further. Contact us today at 904-354-4935 to get all of your questions answered and begin your future towards a debt-free life!