Bankruptcy is one of the ways to get rid of all your unsecured bills; however it should not be one of the preferred options for debt consolidation. Once you are declared bankrupt, you wouldn’t be able to gain financial help from any organisation and you would have to rebuild your personal credit all over again. Such a process of rebuilding your credit all over again may take as many as 8 to 10 years. You are likely to face financial problems during this period and hence it is certainly not beneficial to declare bankruptcy.
On the other hand, if you have major debts including a credit card debt, it would be advisable to approach a debt consolidation company. These companies negotiate the liabilities with the creditors on your behalf and get you a lower interest rate with a longer pay back time. Often, there is a fee attached to their services as well, but with all the benefits, it is often worth it.
If you have a regular monthly income, it would be wise to pay your debts in monthly instalments. Obviously, during the credit counseling sessions, you may have told that the credit report contains a list of your liabilities, but it also contains a record of your monthly income. In such a way, your credit rating would not be affected as much and therefore it an ideal way to consolidate your debts.
