If you’re experiencing serious bad credit problem, perhaps you’re thinking about whether to acquire debt consolidation or filing for bankruptcy.

In order to give you an objective view about debt consolidation and bankruptcy, let’s discuss both and discover their advantages and disadvantages.

Filing for Bankruptcy

Ask a credit counselor or a financial consultant, and you’ll probably be advised not to file for bankruptcy as long as you have other options. However, but for some people who have obtained debt consolidation but cannot keep up with their payments, filing for bankruptcy may be the better choice.

Yes, filing for bankruptcy doesn’t necessarily mean you’ll never be able to regain a good credit history. It’s true that bankruptcy will be reflected on your credit report for seven years but it doesn’t mean that you cannot do anything to improve your credit within that 7-year period. If you carefully weigh your options, you may find that bankruptcy can bring you peace of mind and help you make a fresh start by rebuilding a better credit rating.

After bankruptcy, you can rebuild you credit history by obtaining new credit and making sure that your bills are getting paid off on the dot and that no single balance is missed or unpaid. However, before you can file for bankruptcy, the new bankruptcy law requires that applicants complete a credit counseling course at least six months before filing. Seek advice from a bankruptcy lawyer to understand more about the rules of bankruptcy.

What About Debt Consolidation?

Debt consolidation is usually the advice recommended for people who are swamped with bad credit. Applying for a debt consolidation program will help you pay off your debts from all your creditors at once to stop the interest rates from accumulating.

Instead of paying multiple creditors, you’ll only be paying a single creditor -your debt consolidation company. Consequently, the interest rate you’ll be paying will be for just for a single account and obviously much lower than what you’re paying for before debt consolidation.

However, some people who obtained debt consolidation were not able to pay their debt consolidation company on time or even missing their payments for consecutive months. As a result, their credit history is again marred with bad credit and they find themselves in the same swamp of debt.

Why? Because they refuse to take serious responsibility of their debt. After obtaining debt consolidation, they continued with their uncontrolled spending habits. They did not make changes in their lifestyle. Thus, at the end of the month, they still don’t have enough cash to pay off the debt consolidation loan they acquired. Instead of getting of free from debt, they again start to throw themselves in the quagmire of bad credit.

Successful Debt Elimination

Clearly, in both cases, success depends on being responsible payer. Whether you choose to file for bankruptcy or debt consolidation, you will be faced with the challenge of managing your finances more responsibly.

Everyone who wants to have a good credit history needs to adjust his lifestyle according to his financial capability. Spending more than what your monthly income can afford will no doubt cause you problems. So if things are starting to get out of control, if you notice your bills are starting to pile up then try to examine your way of life immediately.

Be objective when analyzing the way you handle your finances. If you know that some changes should be made, then do so. Don’t try to make excuses. If you don’t, you might always find yourself confronted with the same question -which is the better choice- debt consolidation or bankruptcy?