Does anyone know how I can help my friend consolidate his debt?

I reccommend Dave Ramsey’s book “Financial Makeover” not only will it help him get out of debt but it will keep him from going back into debt. There is a chapter where debt consolidation is discussed.

Ive actually heard the other way around bankruptcy > debt consolidation

Paying off your debt is better than filing for bankruptcy. Consolidating the debt might make it easier to pay off. He needs to talk to a financial advisor or credit counseling service; the advice he gets from a credit counselor is going to be biased towards using their services, but aside from that the overall advice tends to be good.

The summary of the summary of the advice he’ll get, though, is this: live below your means. Freeze all your credit cards in blocks of ice so that you’ll have to wait at least overnight before using them. Pay in cash whenever possible. Make regular debt payments, and consider them at least as important as rent and utilities. Negotiate with your creditors to lower your interest rates, because they’d much rather have you paying less than not paying at all.

Beware offers to “eliminate a portion of your debt”.

That’s where you negotiate with the creditor to pay only a portion of what you owe. They’d rather get something than nothing. But on your credit report, it’s almost as bad as bankruptcy… because you’ve failed to recompense in full.

That’s a possibility to consider if you can’t put food on the table and clothes on your kids. Or to prevent bankruptcy. But it shouldn’t be your first option.

And bankruptcy ain’t the Get Out Of Jail Free card it used to be. Now it’s a big, black mark on your credit history – and – you still gotta pay almost everything back.

If there is NO way you can pay the money back. If you owe 100,000 because of a failed business for example. You will be better off file for Chapter 7 and start fresh. You don’t need to pay everything back. Only certain loans such as student loan and taxes you cannot include in your Chapter 7 case. Your credit actually starts improving as soon as your case is finalized. You might even get your first (low limit, high fee) credit card within the first year to start rebuild your credit history. In seven years, your record will be clean from Chapter 7.

If you owe below 50,000 you might want to go the other way. You also have to figure out how long this is going to take you to pay the deals off before your credit starts improving.

Also be careful of who you hire to do the job. I heard stories of people getting screwed by bad consolidate company. I also heard story of bad lawyer lost their client’s house when they didn’t have to. Do your research on whom to hire to file for you. Very important!

I personally recommend Money Management International as a great option. I am using them now for debt counseling and consolidation. It has saved me tons of money and I have paid off 8 of the 18 credit cards I owe in the first year. They are friendly and have excellent customer service.

Good luck to your friend! I know every situation is different…just wanted to share what has worked so far for me personally.