Is debt consolidation better than bankruptcy? You should ideally decide one way or the other based on what each entails and what your current and future financial position is.

Bankruptcy means declaring that you will not be able to meet any of your debt obligations and giving away control of all your assets to trustees, who will eventually auction your assets to settle claims. It also means your credit report will show your
bankruptcy status and there will be a drastic drop in your credit rating. This potentially translates into your being unable to get any loans in the conceivable future.

Debt consolidation means getting one big loan and paying off all your other pending loans. It is an option to consider when you want to keep your credit rating intact and if you have an asset like a home against which you can take out a home equity loan or when you know that in the near future, your finances are going to improve, like perhaps a huge anticipated bonus at work.

A debt consolidation loan also reduces your monthly outflow towards debt repayment as it has longer repayment periods. It is best to consider your long term plans and the impact of bankruptcy and debt consolidation on your future, before making a decision between debt consolidation and bankruptcy.

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