To many people, debt consolidation sounds like a solution to debt problems. By consolidating credit card debt into one loan, debtors can reduce their monthly payments and pay a lower interest rate.

Unfortunately, the promises of debt consolidation often do not pan out.

Why Debt Consolidation Often Doesn’t Work

While debt consolidation allows debtors to reduce their monthly payments, it does so at a cost. That cost is spreading the payments out over a longer period of time. Even though the interest rate is lower, the solution does not solve the underlying problem. The problem is too much debt.

By spreading out the payments, the consumer carries a burden of debt for years to come. That debt can make it difficult to keep up monthly bills. In most cases, credit card debt returns. Then the debtor will face the same problem again: What to do about too much debt.

Bankruptcy a solution

For most people with serious debt problems, bankruptcy is a better option than debt consolidation. Bankruptcy provides the following advantages:

  • You can eliminate 100 percent of credit card and many other kinds of debt.
  • Bankruptcy protects you from adverse creditor actions, such as lawsuits and judgments.
  • Bankruptcy protects many assets you want to keep, such as retirement savings, equity in your home up to a certain amount, and your car up to a certain value. Most people who file bankruptcy don’t lose any assets.

Before you choose a bankruptcy alternative, you should explore all of your debt relief options with an experienced lawyer.