Debt Consolidation and the New Bankruptcy Law

New Bankruptcy Law Secrets

Debt Consolidation Loans

When individuals get into financial hot water and feel as though they are rapidly sinking will often grab at any solution they can find. Unfortunately debt consolidation may not be the best solution over the long term.

If you have a lot of unsecured credit card debt you can't pay off, you might think that a debt consolidation loan will quickly get you back on your feet. But where are you going to get such a loan if your credit report includes a long list of debts? You're probably going to have problems landing an advantageous loan.

So many people feel forced into using the equity in their homes. They take out a home equity loan which is usually very easy to get as it's a fully secured loan secured by the equity you have in your home.

But is this really what you want to do? When you get such a loan you are, in effect, converting an unsecured debt into a fully secured one.

A chapter 7 bankruptcy can be used to wipe out that unsecured debt. But once you use the loan proceeds to pay off your credit card debt, the chapter 7 option vanishes. If you use any kind of bankruptcy now you'll have to deal with your mortgage holder in an attempt to keep your home.

For some, the home loan route is a bad idea. If you have enough debt to qualify for a chapter 7 bankruptcy and your income is low enough to qualify also - perhaps the chapter 7 deal is the best overall.

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