Having a mountain of debt can make life difficult and stressful. When the debt gets to be too much, it can almost seem pointless to try to do anything about it.
There are a lot of options for dealing with debt, and some of them, like bankruptcy, have gotten a bad reputation. The truth is that there isn’t one solution that works for every situation. There are a lot of options, and even some of those can be tailored to be a better fit.
Here are some myths about bankruptcy and the truth behind them.
Debt consolidation will always mean a savings
Most of the time, consolidating your debt result in seeing “savings” on the front end, usually in your monthly payments. If it didn’t appear to be a good deal, people wouldn’t want to do it. The tricky part comes in when you look at the debt over a longer period.
Simplified, debt consolidation involves taking out a loan that will pay off all of the current debts so that you have one monthly payment. The details, however, can get tricky. First you’ll need to qualify for a loan. Often this process will simply make the loan term longer. While that can be helpful in making the monthly payment smaller right now, it can also mean that there is more time for interest to accumulate.
If you have some confidence that your financial situation is going to improve in such a way that you’ll be able to pay off the debt early, then this isn’t a bad option.
Bankruptcy is always the worst solution to your debt problem
Being in so much debt that you’re considering bankruptcy isn’t a situation that anyone wants to be in. There are a lot of circumstances that got you to the point where you’re thinking about bankruptcy as an option. There were probably even factors that were completely out of your control.
The fact of the matter is that when it’s time to deal with your unique debt situation, there are a lot of options depending on your circumstances and your goals. One of those options is bankruptcy, and it might be the right solution depending on your situation. The best idea is to look at all of the available options to determine what is realistic in your situation.