Many people who find themselves in debt utilize one of the professional debt consolidation companies to rid themselves of the worry of sorting the problems out themselves.

While some simply give up and file for bankruptcy, others continue to feel there is a stigma attached to filing a bankruptcy and it is they who will be likely to take a look at the debt consolidation companies.

Today's erratic economy has caused many people to have debts that they never ever expected to have. They were going along nicely with two incomes, when out of the blue the bottom fell out and either one or both incomes were lost because of outsourcing or downsizing; in some instances to actual company failure because of no new business, or not adequate money with which to purchase supplies, consequently salaries cannot be met.

Thanks to the many specialized debt consolidation companies, people can now see a way out of the despair.

As a result of this economy, both individuals as well as companies have been forced into a new way of life. The options are usually Bankruptcy or debt consolidation. Let's have a look at this from the perspective of the individual rather than a company.

If the individual takes the Bankruptcy route, there are two choices; a Chapter 7 filing which will clear out all of the unsecured debt. Secured debts would, needless to say, have to be reaffirmed; a Chapter 13 is a debt consolidation.

Many people feel that they do not want to wipe out the debts since they may want to do business with these lenders when things get back to normal. In that case, they can file a Chapter 13 which allows them to pay the creditor a percentage, calculated according to the amount of the debt, over a period of three to five years.

Throughout this time the individual is under the protection of the Federal Bankruptcy Court and just cannot be harassed by the debtor.

The debt consolidation company offers the same service as the Chapter 13 bankruptcy does. The difference in between the two is that with a Chapter 13 you are in the protection of the Federal Court System. Using a private debt consolidation company you are not protected, and you creditors can continue to harass you even if they are receiving payment each month. Unfortunately, because the payment is, in both cases, calculated on the balance due to the creditor, the payment may be much smaller than the creditor would like it to be. This is where the harassment commonly comes into effect.

In case there is a foreclosure along with the debts there is not much that can be done unless the individual gets there quickly. In a Chapter 13, the house payments may be lowered and a reaffirmation is scheduled. In a private debt consolidation there is little chance of saving your home from foreclosure except if it is still very early and then the house payments can become part of the consolidation but lowered..

In case you are an individual that is facing the debt predicament that is striking many today, then calculate your current income (worker's compensation, social security, retirement fund, savings, investments, etc.) and think about which of the choices will best suit your present state of finances. You may want to talk to an attorney that will steer you in the course of bankruptcy or debt consolidation. There are attorneys that will help you pro bono (free) in the event that you will call your local Bar Association.

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