Lumping all of your myriad debts into one bundle can help you organize your debt, and set the stage for you to better pay it off. There are some tradeoffs, though. “Consumers pay back 100% of the debt, plus interest,” the paper explains. “Additionally, the loan is often secured by the borrower's property, such as a home or car, which puts those items at risk if the borrower cannot pay. Beware of high fees, and check the service's reputation. [Plus], those working with a debt consolidator may sacrifice the freedom to open and use additional credit lines.”
Yup, the “B” word. But if your debt situation is truly unbearable, then bankruptcy may be the way to go, as a last resort. The paper points out that bankruptcies are harder to come by these days. “Bankruptcy reform enacted in 2005 sharply curtailed filings for Chapter 7 bankruptcy, the type of bankruptcy that eliminates most consumer debt,” it states. In addition, bankruptcy, in some situations, may not relieve you of all of your debt burden. “Chapter 13 bankruptcy filings, which require consumers to repay debt on repayment plans, are available to those whom their state determines, through its means test, have enough income to pay back at least some of their debt. (Also), repayment terms generally are less favorable than those found with debt settlement.”
It’s the holiday season – that time of year when you can really start racking up some serious debt. Stay vigilant, and if you do get into trouble, refer to the tips listed above.