The tough economy has left many Tennessee residents struggling to manage their debt. People may not have enough resources to pay for their everyday needs and pay down the debt. Therefore, it is often necessary to engage in some sort of debt management in order to get their finances under control.

In this situation, consumers often have more options than they think that they have. People do not just have to fall behind on payments or be stuck paying the minimum balance forever. In some cases, a bankruptcy can be a good option and give consumers a fresh start. In a bankruptcy, debt will be eliminated by the discharge. However, a bankruptcy can damage a person’s credit report and score for the next seven years. A bankruptcy can also provide important asset protection from creditors. Not only will a bankruptcy stop creditor harassment, but it can also prevent some creditors from repossessing property or garnishing wages.

Another option for consumers in engaging in consolidation. In consolidation, all the debt is combined into one more manageable payment. In these cases, consumers often negotiate with creditors to get the payments combined. Debt consolidation can be a good way to get out from unmanageable debt without as big of an impact on a person’s credit score. However, the payments will be spread out over a long time, so it could be awhile before a person is debt free. Also, some consolidation companies have been scams so consumers must be careful when choosing this route.

People who are struggling with debt need to understand their options. With the right debt management strategy people can get the relief they need, create a budget and get out of debt.

Source: The Huffington Post, “Debt Consolidation or Bankruptcy? Choose Wisely the First Time,” David Goehst, Sept. 26, 2014