When deeply in debt, some Tennessee residents may try to avoid bankruptcy by consolidating their bills via another method. Debt consolidation loans are a common method, as are assets like retirements accounts or home equity lines of credit. These strategies may save money by lowering interest rates, but they rarely solve an individual’s real debt problem.

Sometimes, debt happens because of emergencies or large unforeseen expenses like medical bills. Debt may arise from sudden job losses or injuries that prevent a person from working. Much of the time, however, debt is a simple matter of a person consistently spending more than they make by buying unnecessary or luxury items on credit. When debt consolidation is used in these situations, it often fails to fix a person’s financial problems because it fails to help them notice their habits or change their spending. Since no real controls are put on the person’s spending, they often end up right back where they were before.

It is possible to use debt consolidation strategically. If a person can change his or her spending habits by not using credit cards, creating a budget and making a commitment to grow savings for emergencies, then debt consolidation may work for them.

For others, filing for a Chapter 13 bankruptcy may make more sense. Bankruptcy may sound intimidating or an option of last resort, but it is better to view bankruptcy as just another financial tool or strategy a person may consider with an attorney’s assistance to get their finances back in order. Chapter 13 bankruptcy works to consolidate and pay off debt under a strict repayment plan. Most importantly, it keeps a debtor responsible by enforcing what they can and cannot spend money on. At the end of the term, the debtor may be granted a discharge of some remaining debt.