{"id":289,"date":"2012-08-07T19:48:46","date_gmt":"2012-08-07T19:48:46","guid":{"rendered":"https:\/\/mn-bankruptcy.com\/blog\/?p=289"},"modified":"2025-08-11T19:22:50","modified_gmt":"2025-08-11T19:22:50","slug":"the-downside-debt-consolidation","status":"publish","type":"post","link":"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/","title":{"rendered":"The Downside to Debt Consolidation"},"content":{"rendered":"<p>Debt consolidation is typically tried in an effort to avoid filing bankruptcy. Often it&#8217;s a big mistake. In this process, a consolidator will attempt to compile a person&#8217;s debt into one loan that offers a low interest rate and monthly payment. The goal is to allow the person to pay off his or her debt gradually without having to rely on bankruptcy to do the work. This is certainly an option to look into, but it is not as perfect as society makes it out to be. In fact, it may actually be worse than filing for bankruptcy in a lot of cases.<\/p>\n<p>Before you commit to debt consolidation, consider the following disadvantages:<\/p>\n<ul>\n<li>You are turning old debt into new debt. Old debt washes in bankruptcy much better than new debt. When debt is new you are more open to the claim that you intended to never pay but had planned all along to file bankruptcy. This is grounds to object to your bankruptcy discharge. When you rob Peter to pay Paul, Peter might get really mad and file an objection in your bankruptcy case. Paul doesn&#8217;t mind, but watch out for Peter.<\/li>\n<li><strong>Debt consolidation can still damage your credit<\/strong>. If it takes you five years to pay off your outstanding loans, you are going to have at least five years of bad credit. With a bankruptcy, you can at least start rebuilding your credit shortly after you complete the process.<\/li>\n<li><strong>Debt consolidation requires a long-term commitment<\/strong>. You have to be able to pay off a loan for a long time, probably longer than any other loan you have had in the past. It is up to you to determine if you can do that with your income.<\/li>\n<li><strong>Debt consolidation will not work for all forms of debt<\/strong>. You may still have some loans to pay off independently, thereby defeating the purpose of the &#8220;one-stop debt.&#8221;<\/li>\n<li><strong>Debt consolidation may not save you any money in the long run<\/strong>. Even if you secure a low interest rate, you will probably have to pay off your loan for an extensive period of time. That is going to add up to a lot of extra money that you may not have to spare.<\/li>\n<\/ul>\n<p>Bankruptcy may not be the solution for every debtor, but neither is debt consolidation. You have to weigh out the consolidation and bankruptcy facts to determine which process is best suited for your debt. Then you can start looking for a debt relief attorney to help you get your finances back on the proper financial track.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Debt consolidation is typically tried in an effort to avoid filing bankruptcy. Often it&#8217;s a big mistake. In this process, a consolidator will attempt to compile a person&#8217;s debt into one loan that offers a low interest rate and monthly payment. The goal is to allow the person to pay off his or her debt &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;The Downside to Debt Consolidation&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[56],"tags":[134],"class_list":["post-289","post","type-post","status-publish","format-standard","hentry","category-debt","tag-debt-consolidation"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Downside to Debt Consolidation - Better Call Dave - Bankrupt MN Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Downside to Debt Consolidation - Better Call Dave - Bankrupt MN Blog\" \/>\n<meta property=\"og:description\" content=\"Debt consolidation is typically tried in an effort to avoid filing bankruptcy. Often it&#8217;s a big mistake. In this process, a consolidator will attempt to compile a person&#8217;s debt into one loan that offers a low interest rate and monthly payment. The goal is to allow the person to pay off his or her debt &hellip; Continue reading &quot;The Downside to Debt Consolidation&quot;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/\" \/>\n<meta property=\"og:site_name\" content=\"Better Call Dave - Bankrupt MN Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/davidkelllylawoffice\" \/>\n<meta property=\"article:published_time\" content=\"2012-08-07T19:48:46+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-08-11T19:22:50+00:00\" \/>\n<meta name=\"author\" content=\"DaveKelly\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"DaveKelly\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/\"},\"author\":{\"name\":\"DaveKelly\",\"@id\":\"https:\/\/mn-bankruptcy.com\/blog\/#\/schema\/person\/a385963a920f92e1cf406fa921c98453\"},\"headline\":\"The Downside to Debt Consolidation\",\"datePublished\":\"2012-08-07T19:48:46+00:00\",\"dateModified\":\"2025-08-11T19:22:50+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/\"},\"wordCount\":431,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/mn-bankruptcy.com\/blog\/#organization\"},\"keywords\":[\"debt consolidation\"],\"articleSection\":[\"debt\"],\"inLanguage\":\"en\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/\",\"url\":\"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/\",\"name\":\"The Downside to Debt Consolidation - 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Sometimes that seems like a long time, and other days I feel as if I just started. These days my practice is devoted entirely to counseling folks concerning their financial problems and representing them in Chapter 7 and Chapter 13 bankruptcy. One thing I don't do is credit repair. When asked about matters concerning credit scores, I like to say \\\"I'm a very good source of unreliable information about that.\\\" What I mean is that I hear a lot about it from my clients who often report back to me how they are doing after their bankruptcy is completed, sometimes even years later; but having heard some stories from a few people doesn't qualify me to give any advice. I spend a lot of time with my clients. I want to be sure we get it right. There are civil and criminal penalties for concealing or providing incorrect information in a bankruptcy care, and my goal is to keep myself and my clients as far away from problems like that as possible. You can find me in MInnetonka near I-394 and Hopkins crossroad. It's ten or fifteen minutes from downtown Minneapolis. You can see parts of Plymouth, Minnesota, Golden Valley, Minnesota and St. Louis Park, Minnesota from the high ground in front of my building. If you take a look at the map, you can see that most of St. Louis Park is closer to my office than many parts of Minnetonka.\",\"sameAs\":[\"http:\/\/www.mn-bankruptcy.com\"],\"url\":\"https:\/\/mn-bankruptcy.com\/blog\/author\/davekelly\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The Downside to Debt Consolidation - Better Call Dave - Bankrupt MN Blog","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/mn-bankruptcy.com\/blog\/the-downside-debt-consolidation\/","og_locale":"en_US","og_type":"article","og_title":"The Downside to Debt Consolidation - Better Call Dave - Bankrupt MN Blog","og_description":"Debt consolidation is typically tried in an effort to avoid filing bankruptcy. Often it&#8217;s a big mistake. 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