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Are you finding yourself more and more in debt and more and more having problems making even the minimum payments? You have probably heard of Chapter 13 bankruptcy and debt consolidation but which is the best for you to do.

Statistics say that 25% of people in out of control debt file for bankruptcy. Is this the better alternative? Is debt consolidation better?

People who have a regular income and not more than $250,000in debt and not more than $750,000 in secured debt can apply for Chapter 13. It is great for someone who is behind on a mortgage, wants to protect their assets from liquidation and cannot qualify for Chapter 7 because of disposable income.

Chapter 13 has other advantages also. You can file Chapter 13 repeatedly, payment terms can be extended on most debts in Chapter 13, modifies the interest rate on some loans. Chapter 13 can also be used to cover debts not discharged by Chapter 7.

Chapter 13 also has some disadvantages, it appears on your credit report for 7 years, borrowing money will be difficult during and after the bankruptcy, repayment often puts debtors on a strict budget. Not all debt are discharged, some remain even after the bankruptcy is filed and closed. Legal fees for Chapter 13 can get quite high also and there is a limit to the amount of debt you can discharge.

Let us look at debt consolidation now. Debt consolidation gives you one monthly payment with decreased interest rates. The monthly payments are less than before you consolidate and you have a single creditor who makes the payments for you (after you send them money of course) and will also work out the payment plan for you.

Debt consolidation also has some downfalls, with a debt consolidation it also can take longer to pay off your debts. You also lose your assets in debt consolidation because these are secured loans. Make sure you can pay the monthly payment you work out with the company, as you do not want to end up losing your house (which is usually what is put up as collateral).

Both Chapter 13 and debt consolidation have their pros and cons. Is one better? Well, it all really depends on the person and the situation they are in financially. Be sure to look at all you options.

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