Debt Consolidation vs. Bankruptcy

When credit scores are low and debt feels unmanageable, choosing the right path forward requires clear information. In this Credit Corner episode, Ellen Falbo breaks down the practical differences between debt consolidation and bankruptcy, including Chapter 7 and Chapter 13 filings.

Ellen explains how bankruptcy can be an effective reset for people with large amounts of debt and limited income or assets, while also outlining the long-term impact on credit reports and the temporary restrictions on borrowing during the bankruptcy process. She also discusses why some lenders may still extend credit after bankruptcy and when consolidation may be a better fit for those who need continued access to loans.

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Transcription

More in this series

• The most common reason credit scores drop (1:14)
• How to plan for your future and get out of debt in midlife (1:47)
• Why Your Credit Score Varies by Bureau (1:35)
• How Many Trade Lines Do You Actually Need? (1:12)
• Why Credit Drops Fast But Builds Slowly (1:20)
• Why Paying Off a Loan Can Drop Your Credit Score (1:18)
• Financial Literacy Class: Credit scores, budgets, and how to use both (38:17)
• What Credit Score Do You Need to Buy a Car? (1:28)
• The Best Credit Habit You Can Build (2:11)
• How to Start Saving for Retirement (1:54)
• Credit Tips for College Students (0:58)
• How do you start a budget? (1:25)
• When’s the best time to pay your credit card bill? (1:23)
• Counter Offers Explained: We’ll Get You The Most We Can (1:59)
• Why Possible Keeps Loan Amounts Manageable (1:27)
• How Possible Decides Who Qualifies for a Loan (1:48)
• How to Fix Your Credit (1:14)
• What You Can Actually Dispute on Your Credit Report (1:31)
• How to Rebuild Your Credit After a Score Drop (2:06)
• How to Spot Credit Repair Scams (1:13)
• Can You Get a Loan or Credit Card With Bad Credit? (1:31)
• Overwhelmed by Debt? Here Are Your Options (2:24)
• Are Debt Consolidation Loans Worth It? (2:37)
• Can Sold Debt Still Be Collected? (1:48)
• How to Use Credit Cards the Right Way (1:30)
• What to Know About Debt Relief Companies (1:05)
• How to Save for Holiday Spending Without Going Into Debt (1:14)
• Smart Strategies for Paying Down Debt on a Budget (2:36)
• Simple Ways to Build Credit Without Taking on Debt (0:50)
• Why Reading the Fine Print Could Save You Big Money (0:44)
• Why You Are Bigger Than Your Credit Score (1:05)
• What to Know About Starting Your Credit Journey (1:05)
• Three Smart Moves to Start Building Your Credit History (0:54)
• Why Not Everyone Has a Credit Score—and How to Get One (0:34)
• What to Do When You Can’t Afford Student Loans (0:33)
• Credit Cards Aren’t a Substitute for a Savings Account (1:02)
• Paying Interest to Build Credit History? Here’s a Better Way (0:45)
• Does Carrying a Credit Card Balance Help? (0:27)
• Can You Borrow a Down Payment? Reasons Why That’s a No (0:48)
• Should You Skip Your 401(k) Contributions? (1:21)
• You Are Not Your Credit Score (1:05)
• 4 Easy Ways to Check In on Your Money Right Now (1:29)