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Explore bankruptcy vs. personal loan filing before signing

Louisiana consumers may consider refinancing their credit card debt by obtaining a personal loan. It makes sense because that will mean the consumer can make one monthly payment at a particular interest rate rather than multiple payments at different interest rates. However, there are issues to consider before taking such a step, and comparing it to the advantages of filing for bankruptcy may be appropriate. The first thing to look at is the overall savings a personal installment loan offers -- including any origination fee, which could be between 1 and 5 percent of the total amount.

Consumers who can pay off existing debt within one year may not save much by taking out a personal loan that typically has a repayment period of three to five years. It may be much easier to pay one monthly installment rather than juggling multiple payments on different due dates, but only if there will be a significant savings in the overall interest over the repayment period. Another advantage of a loan is that the consumer will have a clear indication of when the debt will be settled, assuming monthly payments are maintained for the entire period.

Another aspect to consider is whether it will be possible to avoid adding new credit card debt during this time. Working hard to get rid of overwhelming debt while adding more at the same time can cause a spiral of debt that could be worse than before. After considering these points, it may be beneficial to look at other debt relief options.

A seasoned Louisiana bankruptcy attorney can provide valuable information and advice about the available remedies for debt problems. With comprehensive knowledge, other options may prove to be more beneficial. For example, the personal loan repayments will be made over three to five years, and so will a Chapter 13 debt reorganization bankruptcy. It may achieve the same end result; however, the Bankruptcy Code offers several levels of protection that are not available from the providers of personal loans. Learning about the pros and cons of all options can help in making informed decisions.

Source: wtvm.com, "7 things to know about refinancing credit card debt", Andrew Housser, Accessed on Nov. 25, 2016

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