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Bankruptcy vs. Credit Counseling: What Should I Do?
Credit Counseling and bankruptcy are both ways to relieve the
stress of debt. However, they are very different and it is
important to understand both before making a decision as to which
is best for you.
Credit counseling is a program designed to help those who are
in a state of debt and cannot find a solution to their debt
problems. They offer services that will allow you to work with a
certified credit counselor to devise a plan that is tailored to
your specific needs and goals. Credit counseling agencies often
provide services for free and will help to educate you about how
to avoid financial problems in the future by offering debt
management classes or seminars. They do not erase your debt.
Instead they work with you to budget money so that you can pay
off the debt often times by debt consolidation. Collection will
continue while using a credit counselor, however, in most cases
companies who are owed money will try and work with you to help
you payoff your loans. Credit counseling services often help you
to reestablish credit after the loans are paid.
Bankruptcy is very different. It will completely clear your
debt in most cases and you will no longer be hassled by
collection agencies and their attorneys. There are two kinds of
bankruptcy; the one that is right for you will depend on your
situation. When filing Chapter 13 bankruptcy you are able to keep
property that is mortgaged such as your house or car and are
expected to repay debts in three to five years. Under Chapter 7
bankruptcy, you must give up all property and assets that you
own. There are exceptions in some states for items such as work
tools and household furnishings. Bankruptcy will certainly clear
your debts and stop foreclosures and wage garnishments, however,
you will be unable to establish credit for up to ten years.
Filing bankruptcy can also be very expensive compared to credit
counseling.
Take time and research credit counseling very carefully before
deciding on bankruptcy as it can save your credit in the long
run. Most people feel much better about themselves when they can
pay off their debt and become educated about how to stay out of
debt rather than filing bankruptcy.
Timothy Gorman is a successful Webmaster and publisher of
Debt-Relief-Solutions.com. He provides more debt relief,
consolidation and credit
counseling information that you can research in your pajamas
on his website.
MORE RESOURCES:
Credit - Google News
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