Avoiding bankruptcy through debt consolidation ... It's often just a scam
Many people are so anxious to avoid bankruptcy that they are vulnerable to scams. There are huge numbers of disreputable companies out there who will promise you they can reduce your debt by an enormous percentage and put you on an affordable payment plan. Don't be taken in by a scam. You are better off consulting a licensed and insured attorney first to get the real answers.
It is an unfortunate fact, Debt Consolidation plans fail. Why?
Many people enter into debt negotiation with the best intentions. They want to avoid the perceived stigma of bankruptcy and they honestly want to repay their debts. Other people have been led to believe that debt negotiation will leave them with good credit. This is not correct.
Often times, despite the false promises made by debt consolidation companies, you get sued along the way. If you don't have a lump sum to pay the debt in full or to hire a lawyer to defend against the law suit, you will not be able to avoid the inevitable judgment.
What happens if you lose your job or encounter unexpected financial difficulties along the way and are unable to keep up with the negotiated payments? Your creditors will file suit. Now you are worse off than before because you have paid a substantial amount of money to a debt consolidation service for nothing.