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Debt Consolidation Loans Versus BankruptcyArticle Summary: With so many people struggling financially to make ends meet this article looks at the options available to you when you are in financial debt, and helps you decide and compare the benefits of both consolidating your loans or going bankrupt.
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Resolving Financial Difficulties
If you are in debt, your overwhelming concern is likely how you can resolve your financial difficulties. You may be considering a number of options, including bankruptcy and debt consolidation loans. While both strategies may allow you to resolve much or all of your debt, there are significant differences between the two programs. If your personal circumstances allow you to make regular payments, you [url=http://www.russel.co.jp/aska/aska.cgi]hollister 5 Good Reasons to G[/url] may be better off choosing a debt consolidation loan. On the other hand, if you are truly in dire financial straits, declaring bankruptcy may be your only option.
How Debt Consolidation Loans Work
It is important [url=http://www.sandvikfw.net/shopuk.php]hollister outlet sale[/url] to remember that debt consolidation loans are indeed loans. You must repay them. [url=http://www.rtnagel.com/airjordan.php]nike air jordan pas cher[/url] In addition, under the Consumer Credit Act of 1974, debt consolidation companies in the United Kingdom must [url=http://www.riad-marrakesh.fr]abercrombie[/url] be licensed with the Office of Fair Trading. However, as of April 1, 2014, the Financial Conduct Authority will be the regulating authority in charge of dealing with consumer debt.
Under the terms of a debt consolidation loan, consumers work out an agreement with their [url=http://www.55173.com.cn/games/_bsz.html]barbour deutschland Kuhn Marie Pierre - Unique Mas[/url] creditors [url=http://www.par5club.com/louboutin.php]louboutin[/url] for the satisfaction of financial obligations. Creditors ultimately receive full repayment of the consumer's obligations, and in exchange, agree to a longer repayment term. In many cases, creditors also agree to reduce or freeze interest rates as an aspect of the repayment agreement.
Debt consolidation loans may be secured or unsecured. Unsecured loans are much like lines of credit - no collateral is required in order for the consumer to receive the loan. On the other hand, secured debt consolidation loans are backed by assets owned by the debtor such as a house, car or valuable jewelry. With a secured debt consolidation loan, the consumer risks losing the collateral is he or she fails [url=http://www.sidegemeinde.com/peutereyoutlet.php]peuterey sito ufficiale[/url] to adhere to the repayment terms of the debt consolidation loan.
In order to be eligible for debt consolidation loans, consumers must have sufficient income to cover their basic expenses with money left over to devote to monthly consolidation payments. Consumers with better credit or more disposable income are more likely to qualify for unsecured debt consolidation loans. On the other hand, consumers with poor credit may be forced to accept a secured debt consolidation loan.
How Bankruptcy Works
Unlike debt consolidation loans, bankruptcy does not necessarily result in creditors receiving full repayment. Under the bankruptcy code in the UK, individuals who declare bankruptcy, either voluntarily or involuntarily, place their financial affairs under the direction of the court during the bankruptcy period. In exchange, their debts are dissolved once the bankruptcy petition has been fully resolved.
To file a bankruptcy, a consumer must pay a fee to cover the [url=http://www.rtnagel.com/louboutin.php]louboutin[/url] costs of managing the bankruptcy petition, and a second fee to cover court costs. During a voluntary bankruptcy, debtors file a petition with the court; the court rules on the petition and debtors' petitions are granted or denied. In some cases creditors may also petition the courts to force consumers that owe them money into bankruptcy.
If the bankruptcy petition is granted, the debtor must turn over his or her credit cards along with control of other assets such as homes or cars. The trustee placed in charge of the petition disposes of the debtor's assets to repay the debtor's financial obligations. If financial obligations remain after the disposal of the debtor's assets, the trustee then allocates a portion of the debtor's [url=http://www.riad-marrakesh.fr]abercrombie pas cher[/url] income [url=http://www.tagverts.com/barbour.php]barbour online shop[/url] to satisfy creditors. In the case of indigent debtors, it is possible that creditors will receive [url=http://asoindep.phpnet.org/index.php?file=Guestbook]hollister 2xist - Perfect Choice for Todays Man - writte[/url] little or no money toward the repayment of their financial [url=http://www.davidhabchy.com]barbour outlet[/url] obligations.
Debt Consolidation Loans Versus Bankruptcy
If you have the means to repay your financial obligations, but simply need lower payments and more time to do so, debt consolidation loans may be preferable. Under a bankruptcy, your bank accounts and credit cards will be frozen, and you will not be able to open new accounts. This is not the case with debt consolidation loans.
Unlike bankruptcies, which are filed with the public Insolvency Register, debt consolidation loans are private agreements. No one need ever know that you have made such arrangements. If you are a professional such as a doctor, a company director or a career military officer or enlisted person, your standing will not be [url=http://www.mxitcms.com/abercrombie/]abercrombie[/url] adversely affected by entering a debt consolidation loan agreement. On the other hand, bankruptcy provides legal protection for truly insolvent debtors. While the bankruptcy petition of a consumer is being considered, creditors may not pursue attempts to force the debtor to repay
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