Loan or Financial Suicide?

Let’s say you're using your house as collateral, and the bank gives you a loan to pay off all your high interest credit accounts and loans. This sounds good, right? However, now you have the loan to pay off! In addition, your credit accounts have no balances, so you may buy a few things here and there and before you know it, your credit cards are maxed out. Now you have the 'consolidation loan' and the credit cards to pay off. Everybody says, "I'll never do that" or "No that won't happen to me" but many do this every day and end up worse off than when they started.

In a study on debt consolidation loans, the FDIC concluded that "…some consumers will increase credit card and other consumer debt after a debt consolidation package is completed, thereby weakening their ability to repay outstanding debts and increasing the likelihood of bankruptcy."

Bankruptcy or Financial Suicide?

Bankruptcy is a legal method of eliminating debt and providing a means for debt- ridden consumers to obtain a "fresh start." In many cases, bankruptcy means the elimination of the debt that you owe to your creditors. There are two primary forms of bankruptcy: Chapter 7 and Chapter 13. Bankruptcy will not eliminate certain bills such as past due taxes, school loans, insurance payments, and the like. These will remain after you've declared bankruptcy. If bankruptcy seems like your only option and you need to know all the pros and cons, we suggest you find out more! Fill out our online form and someone will contact you with more information!