Debt consolidation is when all of your outstanding loans and debts are combined so you can pay back one payment rather than several to all of your creditors. The amount you pay is usually less than what you were paying to all of your creditors. A debt consolidation bankruptcy works the same way, although your debts are paid back through a bankruptcy trustee and your debts are paid back over a period of time depending on the amount of debt you have. The amount you pay is figured out by the trustee and interest is usually stopped to allow you to pay back the debt.

Read below for reasons why you need debt consolidation bankruptcy.

You Have an Excessive Amount of Debt

It's very easy to fall into debt, but extremely difficult to get out of it. With everyone offering you credit cards, including every single store you walk into, and larger named credit card companies as well. If you have a lot of debt, it can be difficult to pay it back. You may end up in a trap where you end up in debt and then get more credit cards to help you either pay back the debt or to buy everyday items such as groceries or gas. If you end up with an excessive amount of debt and aren't able to pay it back, you should consider debt consolidation bankruptcy.

You're Borrowing Often

If you're borrowing often from friends, family, or those payday loan companies to get money until your next payday, you should consider filing for a debt consolidation bankruptcy. If you're borrowing often and can't even make it from one paycheck to the next, it's time to file for bankruptcy. A payday loan company may charge you interest or other fees that can land you upside down even more than you already were. Borrowing too often can lead to poor relationships with those family and friends, in addition to putting you further and further into debt.

If you aren't sure if you need debt consolidation, look at the amount of debt that you have, and the amount of income that you have. If you are upside down with too much debt and not enough income, you may want to consider bankruptcy. Make an appointment with a debt consolidation lawyer to talk about your debt and this type of bankruptcy to see if it is the right path for you.