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:
 GulfNews | Bush: US will work with partners on credit crisis The Associated Press - WASHINGTON (AP) — President Bush says world's wealthiest industrial countries will work together to attack the credit crisis spreading around the globe. ... World Leaders Offer Unity But No Steps To Ease Crisis Bush vows coordination with world powers on financial crisis Time to Act |
 Boston Globe | Without real leadership, we face disaster guardian.co.uk, UK - There is a combination of a worldwide bank run, seizure of credit markets and collapse of asset values that could plunge the globe into a depression. ... Video: Overseas Markets Fall on Financial Turmoil Fears Asian credit default costs soar to record - traders Stocks rally fades on credit market worries |
 The Associated Press | US will work with partners on credit crisis: Bush CBC.ca, Canada - It was the 21st time in 26 days that the president has spoken publicly about the credit crisis gripping financial markets and dragging down stock markets. ... Video: Bush: 'We Must Work Collaborately to End Crisis' |
Is my credit union safe? Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer The government-run National Credit Union Share Insurance Fund insures most deposits at credit unions, ... Credit unions alternative to banks Got Your Money in a Credit Union? You Too Are Safe In tumultuous financial times, credit unions might be an option to ... |
 China Daily | Lehman Credit-Default Swap Payout Could Climb as High as $365 Billion Washington Post, United States - By Heather Landy NEW YORK, Oct. 10 -- In what may shape up to be the most expensive payout ever in the credit-default swap market, sellers of insurance ... STOP FINANCIAL WMD'S: Credit Default Swaps Lehman Credit-Swap Auction Sets Payout of 91.38 Cents (Update1) Insurance on Lehman Debt Is the Industry’s Next Test |
 BBC News | Credit crisis should not hurt poor, ministers urge Reuters - By Lesley Wroughton WASHINGTON (Reuters) - Major economies should not use the global credit crunch as an excuse to renege on aid promises to poor countries ... Video: IMF: Timing right for G7 Credit CRISIS ALERT IMF endorses plan by rich countries to fight credit crisis |
 Los Angeles Times | Fears Grow That Tight Credit Could Crush GM, Ford NPR - Standard & Poor's downgraded the credit of both companies and their financing arms this week. AFP/Getty Images Ford F-150 trucks sit at a dealership in ... Video: Money Minute: GM, GE, Oil CREDIT WATCH HITS GM, FORD GM, Ford too big to fail? |
Is the era of easy credit over for the long haul? International Herald Tribune, France - For Clark, and for a nation of consumers heavily dependent on credit, there are growing signs that those rough times could prove to be more than just a ... |
 WNCT | Anatomy of the American Financial Crisis: How It is Turning into a ... Center for Research on Globalization, Canada - Its failure created a domino effect among other international banks that had lent to each other in the international credit chain. ... Where did all that 'lost' money go? Credit freeze sees small cracks Market news this week for strong stomachs |
Financial troubles spread to credit unions Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer It's not just giant banks on the brink these days: Losses are clobbering nonprofit credit unions that ... |
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