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Whether bankruptcy or debt consolidation is better depends on an individual's financial situation. In 95 out of 100 cases debt consolidation is by far superior to bankruptcy. Bankruptcy stays on your credit reports for 10 years after discharge. The only time bankruptcy is a good solution to debt problems is when the debts are so high that making monthly payments is a burden and a hardship. Most people who use bankruptcy have had a severe change in their finances. The most common causes are divorce and high medical expenses associated with serious injury or illness.

For most people a debt consolidation is a much better method of debt relief. Debt management service companies try to qualify the debtor for a loan to pay off the outstanding debt in exchange for the monthly loan fees. If the debtor cannot get a loan then they will deal with the individual's creditors directly to set up a monthly repayment plan. The debt counselors can negotiate with the lenders to get a reduction in fees or interest. The debtor will make monthly payments to the debt management service. The service then disburses the payments to the lenders as agreed.

Just the elimination of several smaller payments for one payment to all lenders brings relief to the debtor. No more keeping track of several payments every month. Every time the debtor makes a payment, they take a step towards debt reduction and an improved credit rating.

As in any business transaction caveat emptor or let the buyer beware applies. Debtors should check their prospective debt management service through the better business bureau and a web search. Most of these companies have good reputations.

One last tip. Make certain you aren't entering into a debt settlement agreement. This sounds like debt consolidation or management but it is not. Lenders agree to waive some of the principal in these agreements. Debt settlement damage your credit rating almost as much as bankruptcy.

In a nutshell, by a thoroughly researching and then comparing several debt consolidation services, borrowers will be able to qualify and determine the agency that meet your specific financial situation, plus the cheaper interest rate the market is offering. However, it's recommendable working with a seasoned and reputable debt counselor before even make any decision, this is the way you save time because of specialized advise and money by obtaining the best results in a reduced span of time.

Hector Milla is editor of the Reputable Debt Consolidation Companies website – where you can see his best rated debt consolidator service recommendation.

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Tags: Debt, debt consolidation, debt relief, debts