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In most cases, it is preferable to file a Bankrutpcy than to participate in a debt consolidation program. (Debt consolidation loans are only available for debtors who have assets - usually real estate - with equity that can be used as security for the loan.)
This is because both have a similar negative impact on one's credit report, and a Bankruptcy is far less costly. Additionally, in most cases, there will be at least one creditor who will not work with the debt consolidation program, so that there will be at least one debt that remains open after the debt consolidation program is finished.
Lastly, many debt consolidation companies are less than reputable, and it is not possible to know in advance if the company you are dealing with will provide an adequate service to you.
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