Of all the different methods you can use to get out of debt, debt consolidation and bankruptcy are the ones people are most familiar with. There is also debt settlement but that is for another article. In this article learn how to decide between using debt consolidation or bankruptcy to pay off your debts.

The biggest problem with bankruptcy is that not everyone qualifies for the best form of bankruptcy which is Chapter 7. Chapter 7 involves full liquidation of your debts. You do not have to pay back your outstanding balances with Chapter 7. If you talk to a lawyer and you can qualify for Chapter 7 and you have no other options than this would be the way to go.

On the other hand, if you cannot qualify for Chapter 7 and you are required to use Chapter 13 bankruptcy then you should really think twice. The benefits of Chapter 13 are significantly smaller. Your debts are not discharged. You have to repay them back at a certain percentage with a payment plan that can extend up to five years or more. Plus your credit is ruined for at least 7 to 10 years. And it is a matter of public record.

» Read more: Debt Consolidation Versus Bankruptcy – Which is a Better Way to Get Out of Debt?

Bank debt consolidation loans allow you to consolidate all your debts into a single bank loan debt. These loans are useful ways to reorganize and then get rid of debts because they have comparatively less interest rate than most debts. Consolidating various debts to a bank loan will result in low monthly payments and an extended period for payoff of the debt. These bank loans often do not have any late fees. These are the reasons that make bank debt consolidation loans quite popular nowadays.

Most of the bank debt consolidation loans are secured loans, therefore you need collaterals. The type of collateral and its value are determined by banks. Common collaterals include home, vehicle, real estate properties, insurance policies and other benefits. Many banks offer debt consolidation loans on the basis of the customer?s savings account. Most of these loans are provided to persons with average or above average credit rating. But in a few unique circumstances, banks provide loans to even poor credit persons and persons lacking established credit.

» Read more: Bank Debt Consolidation Loans