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Chapter 7 bankruptcy vs. debt consolidation

Debt is an integral part of everyday American life, for people of all backgrounds. Here in Kentucky, credit card debt and other forms of unsecured debt can make life miserable for people laboring beneath it. Thankfully, there are a variety of ways to handle debt, depending on the individual situation, from debt consolidation to Chapter 7 bankruptcy. However, it is important to understand the differences between the two in order to make an informed decision about which option will work best for a given situation. 

Debt consolidation, simply put, is the act of rolling up multiple debts into one. This means that instead of paying down multiple creditors at once, a consolidated payment can be created and a payment plan developed to pay back the amounts in a single monthly payment at a time. Lines of credit and balance transfer credit cards are common tools in debt consolidation, which often feature lower interest rates. 

Chapter 7 bankruptcy is a more aggressive tactic, wherein certain assets are liquidated to pay down creditors. A bankruptcy trustee is assigned to the case, who will take a careful accounting of all accrued assets and debts. While some assets are exempt by Kentucky from this process, the idea is to liquidate assets to pay off creditors all at once and avoid further fees and interest. 

Obviously, each of these options has pros and cons associated with them. With the support of an experienced attorney, a Kentucky resident can gauge these options and determine which is best for their given situation. From Chapter 7 to debt consolidation, there is light at the end of the tunnel. 

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Law Office of Ginger C. Cord, PSC
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Lexington, KY 40507

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