Debt Consolidation vs. Bankruptcy: Which Is Right for You?

Debt consolidation makes sense if you can qualify for a meaningfully lower interest rate and have the discipline not to run up the consolidated debts again.

Bankruptcy makes sense if your debt is truly unmanageable — typically when debt exceeds your annual income, you can't make minimum payments, or you're facing wage garnishment.

Chapter 7 bankruptcy discharges most unsecured debt in 3–6 months but damages your credit for 10 years. Debt consolidation is always preferable if it's feasible — bankruptcy is a last resort..