Debt Consolidation vs Bankruptcy

Americans across the country face the decision of choosing between debt consolidation and bankruptcy. Although these are the two most popular debt relief options for people today, many people wonder which option is best for them. Below goes over the two methods, as well as how the team at Mediator Debt Solutions can help with debt relief with a personalized debt consolidation service.

Debt Consolidation

In simple terms, debt consolidation means consolidating multiple debts into one single loan. This approach helps minimize late payments and late fees that normally incur from having multiple loans or credit cards. For this option, you do have to qualify, which can be difficult if you’ve been late on any payments or if you have collection accounts on your credit report. However, according to Credit.com, this approach increases your credit score over time as it shows up as a new debt on your report. The multiple debts show as if they have been “paid off” on your report. You now have “new debt” to make payments for, and if done correctly, it can boost your credit score back up.

Bankruptcy

The bankruptcy involves restructuring all of your debts. In most cases, this means all debts are considered discharged from you. Generally, bankruptcy is only considered as a last resort option. On a positive note, it gives consumers a clean slate to work with when considering their credit score. However, the downfall to this approach is that it stays on your credit report for seven to ten years. Although it gives consumers a fresh start on credit, it can take them much longer to build their score back up.

Mediator Debt Solutions Approach

The Mediator Debt Solutions team focuses on a form of debt consolidation services. We empower you to get out from under your debt so you can live the life you want. With Mediator Debt Solutions, starting your debt relief program is as easy as three simple steps. First, we figure out the best debt relief plan to fit your needs. Second, you stop paying interest and we set up a special savings account, and a tailored financial plan, to help you payoff your debt. Third, we lower your debt burden by negotiating directly on your behalf. MDS stands with you every step of the way until your debt is completely gone. Contact us today to begin your journey to debt free living.