San Bernardino County SunEditor’s note: Bankruptcy Lawyer Mark C. Schnitzer was profiled by The San Bernardino County Sun this week on the rise in bankruptcy filings in the Inland Empire.

Debt ConsolidationAs a bankruptcy attorney in Riverside and San Bernardino, California, I often find that many of my potential bankruptcy clients inform me that they are weighing their options between debt consolidation and filing chapter 7 or 13 bankruptcy. There are several factors that should be considered.

First, it is of utmost importance that you investigate the debt consolidator that you are dealing with. Many use unscrupulous practices and will cost you far more than simply negotiating your debt yourself. The idea that one payment is magically easier than multiple payments to multiple creditors is simply not true. California bankruptcy attorneys are regulated by the California State Bar as well as by the Federal courts, a indicator of trust to many that bankruptcy law firms must abide by tough ethical standards.

Second, be very wary of any debt consolidation that turns an unsecured loan, like a credit card, into a secured loan, such as a home equity line of credit. Choosing this route will only further drive you into debt and although you may be able to wipe out the debt, the lien may remain on your home. This is particularly an issue if your finances get worse, as bankruptcy might not be able to wipe out your second mortgage lien, though it could have easily eliminated your credit card debt had you not consolidated your unsecured loan into a secured loan.

Third, you need to be honest with yourself about your financial situation. Debt consolidation may not eliminate the debt, which may be the only way out of your financial plight if you have taken on too much debt and have little income. These tough economic times have revealed high levels of prolonged unemployment. I would encourage individuals to think long and hard what options they will have if their unemployment is prolonged, or if their unemployment benefits and savings run out.

Often times, the only viable option is bankruptcy, though there are scenarios where an aggressive payoff schedule at a lower interest rate may allow a debtor to realistically resolve the situation. Debtors are best advised to sit down for an initial consultation with an experienced bankruptcy lawyer to weigh their options before they make a mistake that cannot be undone.

The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Reid & Hellyer, APC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.