When choosing whether or not to file for bankruptcy, most people consider a few different options. One of the most common considerations is debt consolidation. This refers to taking on new debt to cover old debt, combining most or all outstanding balances under one new loan. Connecticut individuals weighing the options between this and personal bankruptcy have a few things to consider.
First, one should consider the pros and cons of debt consolidation. Debt consolidation can make it easier to pay down debt as it can mean you have only one lender to pay. This is particularly beneficial if the new loan has a lower interest rate than the others. However, in order for this lower interest rate to be possible, a borrower typically needs good credit or a solid co-signer.
Personal bankruptcy, on the other hand, offers more of a fresh start. There are certainly downsides to this option, such as damage to a credit score and the possible loss of property and assets. Additionally, not every loan will be forgiven through bankruptcy; for example, student loans are typically not discharged from filing. However, for those who are in serious financial turmoil and whose loans can be discharged, bankruptcy could be the best option.
When surveying options for debt management, it is a good idea to get professional advice. In Connecticut, one of the best resources is often a lawyer who handles debt and bankruptcy issues. These legal professionals can offer advise as to the possible solutions, and also help individuals file the right paperwork to take necessary steps if they choose to file for personal bankruptcy.