Many individuals who find themselves in debt use one of the professional debt consolidation companies to rid themselves of the worry of sorting the problems out themselves.

While a few simply give up and file for bankruptcy, others still feel there is a stigma attached to filing a bankruptcy and it is they who will be likely to check out the debt consolidation companies.

Today's patchy economy has caused many individuals to have debts that they never expected to have. They were going along perfectly with two incomes, when all of a sudden the bottom fell out and either one or both revenues were lost due to outsourcing or downsizing; in some instances to actual company failure due to no new business, or not sufficient money with which to buy supplies, consequently salaries can truly not be met.

Thanks to the many specialized debt consolidation companies, people can now see a way out of the despair.

As a result of this economic climate, both individuals and companies have been forced into a new way of life. The alternatives are usually Bankruptcy or debt consolidation. Let's consider this from the perspective of the individual rather than a company.

In case the individual takes the Bankruptcy route, there are two options; a Chapter 7 filing which will clear out all of the unsecured debt. Secured debts would, of course, have to be reaffirmed; a Chapter 13 happens to be a debt consolidation.

Some individuals feel that they do not want to wipe out the debts because they may want to do business with these creditors when things get back to normal. In that case, they can file a Chapter 13 which enables them to pay the creditor a percentage, calculated according to the amount of the debt, over a period of three to five years.

During this time the individual is in the protection of the Federal Bankruptcy Court and cannot be harassed by the debtor.

The debt consolidation company offers the same service as the Chapter 13 bankruptcy does. The difference between the two is that with a Chapter 13 you are under the protection of the Federal Court System. Using a private debt consolidation company you are certainly not protected, and you creditors can continue to harass you even if they are receiving payment each month. Unfortunately, because the payment is, in both cases, calculated on the balance because of the creditor, the payment may be smaller than the creditor would like it to be. This is where the harassment generally comes into effect.

In the event that there is a foreclosure along with the debts there is not much that could be done unless the individual gets there quickly. In a Chapter 13, the house payments might be lowered and a reaffirmation is scheduled. In a private debt consolidation there is very little chance of saving your home from foreclosure unless it is still very early and then the house payments can become part of the consolidation but lowered..

If you are an individual that is facing the debt dilemma that is striking many today, then calculate your current earnings (worker's compensation, social security, retirement fund, savings, investments, etc.) and think about which of the options will best suit your present state of finances. You may desire to talk to an attorney that will steer you in the direction of bankruptcy or debt consolidation. There are attorneys that will help you pro bono (free) if you will call your local Bar Association.

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