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Millions of people are facing incredible amounts of debt, and are looking for relief. For some, paying off their debt is a seemingly insurmountable feat. Many are faced with difficult choices; even more do not understand what options may be available to them. Certainly, debt consolidation and bankruptcy are worth considering, and understanding the difference between the two could mean salvaging a credit rating or destroying it.

Consolidating debt is an option for individuals who have the ability to pay some of their bills, but need to reduce their monthly payment amounts. The most beneficial aspect of consolidation is that the credit report reflects a paid status, whereas bankruptcy will show that monies owed to creditors were discharged without payment.

Debt consolidation is often accomplished with a home equity loan; however it may be possible to obtain an unsecured loan for the same purpose. It is a means of refinancing unsecured debt at a lower cost than high interest rate credit cards or other financing. Regularly scheduled payments will be lower and will be made to one creditor rather than several. Consolidation makes it easier to manage debt and make timely payments while preserving a higher credit rating.

Bankruptcy, whether it's a Chapter Eleven or Chapter Thirteen, wipes out some or all of existing debt, but it also wipes out any existing credit rating. In addition, it will remain on your credit report for seven years and force you to rebuild credit from nothing. While it may be the only option for people who do not have sufficient income to make monthly payments, and cannot qualify for consolidation, it carries long term ramifications.

Preserving your credit rating is important. With debt consolidation not only will your credit report reflect a paid status, timely loan payments will also help improve your rating. It is by far a better choice than starting over with the negative mark of a 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