Considering debt consolidation? Consider a few things first

When your debt load grows ever larger and you fear that you can no longer manage it, you may be unsure of what to do. When it comes to debt problems and solutions, one size does not fit all. For some, debt consolidation is a solid move in the right direction. For others, bankruptcy is the best option. Truly, the best option for your particular situation is determined by your individual circumstances. Before you choose any one option, it is important to be educated about your options and to ideally seek advice from experienced attorneys and financial planners.

If you are considering debt consolidation as a potential solution to your situation, it is important that you understand what debt consolidation is and how it functions. Debt consolidation serves to combine debt. Once that debt is combined, you will owe only one creditor as opposed to multiple creditors.

If you have reliable income and your bills are fairly manageable, debt consolidation may be a viable option for you. Combining your debt will allow you the peace of mind that comes with paying off a single bill each month at a manageable rate. However, if your income has suddenly become unreliable or your debt is significant and unmanageable, combining your debt will not solve your financial issues.

In this situation, personal bankruptcy may be a preferable option. Bankruptcy can help you either restructure or even eliminate a great deal of your debt. When debt becomes too significant to manage simply by pooling it and paying it off at slightly reduced interest rates, bankruptcy is a more effective debt management strategy than debt consolidation.

Source: KLTV, "Eight facts about debt consolidation," Andrew Housser, March 25, 2013