One alternative to filing Bankruptcy is consolidating your debt. You can consolidate debt a number of ways. One way is to take out a loan large enough to cover the majority of your debts, or all of your debts if possible. This is generally done on debts like credit cards and medical bills. The idea is to get your debts down in numbers so instead of having five different credit cards with five different minimum payments, you now have just one big payment you send to one place. Further these kinds of loans are generally fixed rate so you don’t have to deal with the fluctuations of a credit card interest rate going up on you, which is a nice bonus especially if the interest rates on your credit card were different from month to month.

It’s a decent idea in theory, but the problem is that if you have a lot of debt chances are you will get your larger loan at a high interest rate. Then the problem becomes this: you are paying a high interest rate on a high balance loan which can get very expensive over the long run.

Another way to consolidate debt is take out cash advances against your credit card and use the money to pay off your other credit cards. This is generally a bad idea as credit cards often charge extremely high interest rates for cash advances—they are often double or triple the original interest rate amount!

Another way to consolidate is by filing a Chapter 13. In the simplest terms, a chapter 13 is a reorganization of your debt that helps you pay your debts in a more manageable way. Technically, a Chapter 13 is not a true consolidation because if you owe one credit card $500 and different credit card $2,000 then you still owe those two very separate debts. However, in a Chapter 13 you make one single payment a month to one place and that’s it. As an added bonus, most interest rates are reduced if not completely eliminated in a Chapter 13 so in many ways, it can help you save on money. Also, if you qualify you may receive a discharge (forgiveness) of your debts without paying a cent towards some of them. Further you no longer have juggle all your debts and try to keep track of who has been paid what this month. The stress is virtually removed.

If you have too many debts to juggle and would like to pay them back in a more manageable way, contact JONES LAW today for a free consultation.