Numerous consumers in Pennsylvania struggle with overwhelming debt that drastically decreases their quality of life. In some situations, consumers turn to debt consolidation for help. Meanwhile, others find relief after filing for personal bankruptcy protection. Here is a glimpse of the differences between these two processes.

Debt consolidation is the process of assuming new debt in an effort to pay for old debt. For instance, some consumers borrow unsecured personal loans to cover their existing debts. Ideally, these personal loans come with lower interest rates and simplify the debt repayment process. Meanwhile, with Chapter 7 bankruptcy, a consumer can discharge a portion or even all of his or her debt. With a Chapter 13 bankruptcy filing, consumers can repay their debts in part or in full using brand-new repayment plans.

The benefit of debt consolidation is that a consumer can make a payment to a single lender. Another benefit is that the consumer can establish a date for ending his or her debt repayment, as he or she can select a fixed term for the repayment process — typically five years maximum. Still, debt consolidation may prove challenging for those who do not have strong credit scores or co-signers.

The challenge that consumers face with personal bankruptcy filings is that they generally cannot eradicate their student loan debt, although many other types of debt can be eliminated. However, the benefit of bankruptcy is that it may offer the fresh start financially that a person facing large amounts of debt is desperate to experience. An attorney can provide consumers in Pennsylvania with the guidance they need to complete the bankruptcy filing process quickly and efficiently.