Do Debt Consolidation Services Damage Your Credit Rating?

Bankruptcy Information

Chapter 7 bankruptcy and Chapter 13 bankruptcy offer different forms of protection. If you’re facing a financial crisis, a local bankruptcy attorney can help you determine whether Chapter 7 bankruptcy or Chapter 13 bankruptcy might be the right answer for you.

Generally speaking, Chapter 7 bankruptcy is intended to wipe the slate clean by discharging unsecured debt—debts like credit card debt, medical bills, and unsecured loans. Chapter 13 bankruptcy, on the other hand, is intended to give a debtor time to catch up past due payments over a period of 3-5 years, while keeping secured property like houses and cars.

Just complete this form & let Bankruptcy.me connect you with a bankruptcy attorney near you.

Many people believe the myths or gossip that is associated with debt consolidation. After all it is easier to believe a negative side to something that will get you out of debt, albeit a difficult process to undertake. It’s almost like the old wive’s tales that tell you that “losing weight when you are overweight is bad for your health.” In this case the myth we are talking about is the one where people ask: Do debt consolidation services hurt your credit rating? Most people that do not want to deal with getting rid of their debt will say “yes.”

But how is that possible? You are already in debt up to your ears, creditors are calling right and left – your credit rating is already hurt. Debt consolidation services may not hurt your credit rating any further. Quite to the contrary, they can only help your credit rating and make it better. Doing a debt consolidation is not – declaring bankruptcy – you’re actually avoiding bankruptcy, owning up to your debt and paying it off in a debt consolidation agreement. This means once you have consolidated your debt, and you start making your monthly payments on time, your credit rating will begin to improve.

You have 0 debt on your credit cards, so the moment you consolidate your credit rating will improve. Now, there are both advantages and disadvantages to this credit rating improvement. First You won’t have creditors calling, so you can start relaxing, and that is an advantage. But the disadvantage lies in the fact that those credit cards will be tempting, and you may get even more credit card offers, but you need to stay away from them, because incurring more debt will negatively affect your credit rating.

Hopefully this will have answered your question as to: Do debt consolidation services hurt your credit rating, and make you take that final decision of finally clearing up your credit debt. Granted, it is a painful decision, as all things that are good for you are painful, but it is the best and fastest way of getting out of debt.

Finally yet importantly, by researching and then comparing different debit consolidation providers, borrowers are able to qualify and determine the company that meet your financial situation properly, plus the cheapest interest rate available on the market. However, it’s advisable working with a seasoned and reputable debit counselor before a conclusion is made, this way you save time through specialized advise & cash by getting better results in a reduced span of time.