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By Tim Gorman
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 free debt
consolidation information (http://www.debt-relief-solutions.com/Debt-
Consolidation.html>free) that you can research in your pajamas on his website.
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