Bankruptcy vs. debt settlement vs. debt consolidation

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Bankruptcy vs. debt settlement vs. debt consolidation

My debt to income is high. I cannot afford to pay all my bills. I would like to pay bills, but I need the payment amount lower and 6 years to pay them off. I need my credit to be okay do to I usually am the co-signor on my kids college loans and my spouse is filing for divorce and I would need a place to live. What is the best thing I should do debt settlement or debt consolidation? How bad will debt settlement hurt my credit and for how long?

Asked on June 23, 2009 under Bankruptcy Law, Michigan

Answers:

J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I am a lawyer in CT and practice in this area.  The best thing for you to do here is debt consolidation as this will be the best way to maintain your credit (i.e. you do not want to go into default) and the credit counselling will get you to consolidate the debts to an amount that you can afford.  This will free you up to co-sign for your kids in college.  If your credit is bad, you may not be able to qulif as a co-signor.


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