Debt consolidation and bankruptcy are both debt relief options, but how exactly do they differ?
If you're dealing with mounting credit card debt, you may feel overwhelmed. After all, with several rate hikes over the last two years, there's a high probability that your minimum credit card payments have increased. If you're struggling to make your minimum payments, you may be thinking about debt consolidation or even bankruptcy as a way to get out of debt.
However, neither debt consolidation option results in your debts being discharged. On the other hand, bankruptcy may provide more relief. If you file for Chapter 7 bankruptcy, the court may discharge all of your eligible debts. If you file for Chapter 13 bankruptcy, the court will typically discharge a portion of your debt while restructuring the rest to make it more affordable based on your budget. In either case, bankruptcy usually offers a higher level of relief than debt consolidation.
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