What’s worse~ bankruptcy or using a third party (debt consolidation)?

I know with the new bankruptcy laws that you pay back monies owed, along with getting an extremely bad credit score. The third party route is bad as well but what’s the worst of an already bad situation?

This entry was posted on Friday, February 27th, 2009 at 6:13 am and is filed under Bankruptcy Law. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

7 Responses to “What’s worse~ bankruptcy or using a third party (debt consolidation)?”

1. becca9892003 Says:
   February 28th, 2009 at 2:59 pm

   third party debt consolidation is worse..with bankruptcy it is a clean slate that will heal quickly…the other route has the credit companies continueing to report negitive untill they are paid in full..they just can’t go after you with a payment arrangement set up but will do much worse to your credit rating..

2. chemicalcajun Says:
   March 1st, 2009 at 12:21 pm

   Bankruptcy is a definite last resort. Always try other ways to resolve debt but be careful with which third party to go to.

3. CogWork Says:
   March 2nd, 2009 at 6:56 am

   Bankruptcy is very bad for your credit and will have long lasting effects. Plan on not being able to get loans and credit cards for a couple of years after you file. If you can find a company to loan you money after you file they will likely charge a very high interest rate.

   You are much better off using a third part consolidator to help you pay off your debts and save your credit rating.

4. jdiddley Says:
   March 4th, 2009 at 5:19 am

   Bankruptcy should be your last resort. It is the greater blow to your credit report. As soon as you get things straightened out, work hard to repair your credit report. Also, if things have already started going to collections, there are letters that you NEED the agencies to SIGN BEFORE you pay your debt to them. These type of letters will say in a very legally binding way that they agree to take their delinquency information off of your credit report as soon as you have completely paid the debt. If you do not do this, you will pay them and they will STILL leave their delinquency notice on your report. NO FUN!

   I would relist this question and ask people over the age of 30. These younger people have no idea about the impact of poor credit. They probably haven’t tried to buy a house yet! They also think that it’s the easy way out. There is no easy way out.
   Listen to Phil M and Mark S.

5. Mark S Says:
   March 7th, 2009 at 12:33 pm

   Dude, been there done that. To tell you the truth, I wish my ex and I had found a way to consolidate the crap we had managed to collect rather than bankruptcy. It is still affecting me today and it has been over ten years. Bankruptcy sucks!!! If you can do it, go the loan route.

6. philm Says:
   March 7th, 2009 at 11:18 pm

   Third party debt consolidators will often times challenge every debt you have. When a debt is challenged it has to be taken off your credit report. Sounds good, right? Wrong. Sooner or later the creditors will verify the debt and it gets put right back on PLUS you can be charged with fraud for disputing a valid debt and it will be your butt on the chopping block, not the third party debt consolidators.

7. KITTY44 Says:
   March 10th, 2009 at 6:28 am

   Bankruptcy is by far the worst and last option you should turn to. Me and my husband are currently going through a situation if you go through a third party debt consolidator yes it will lower your credit score but eventually it will go up when you start making the payments. Bankruptcy just flat out leaves a black mark on your file.

   One thing that I do suggest is make sure you check them on the bbb site some organizations claim to be backed by the bbb and then when you go and look the company up they are not enrolled. Out of all of the consolidators that I checked I only found two that were backed by the bbb label. Do your homework and be wise with your decision.