Debt consolidation
Debt consolidation companies promise a way you can consolidate your bills into one monthly payment without borrowing and stop credit harassment, repossessions or wipe out your debts.
Unfortunately, these offers can involve bankruptcy proceedings, but rarely say so. While bankruptcy is one way to deal with serious financial problems, it's generally considered a last resort. This is because it has a long-term negative impact on your creditworthiness. A bankruptcy stays on your credit report, and can make it harder to get credit, a job, insurance, or even a place to live. To top it off, you are likely to be responsible for legal fees for bankruptcy proceedings.
Read between the lines when looking at these offers. Before resorting to bankruptcy, talk with your creditors about arranging a modified payment plan, contact a credit counselling service to help you develop a debt repayment plan, or carefully consider a second mortgage or home equity line of credit. One caution - while a home loan may allow you to consolidate your debt, it also requires your home as guarantee. If you can't make the payments, you could lose your home.
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