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Credit Counseling or Bankruptcy: Which is Best for You?
By Ethan Hunter
People often get to a place where they simply can't pay
their bills, especially in today's economy which is not
particularly sympathetic toward the poor or even the middle
class. Inflation has impacted nearly every facet of daily life
including food, gas, rent, clothes, utility bills and more. At
the same time, salaries, especially in the lower ranges,
have utterly failed to keep pace. When you get to the place
where you cannot pay your bills and have money left over
for food and other necessities, there are some hard
decisions that have to be faced. The options are credit
counseling and debt management services, or bankruptcy.
Both have their pros and cons, so which road to take
depends largely on the individual and how severe his or her
financial problems have grown.
There are numerous credit counseling/debt management
services available, both in most local communities and over
the Internet. The services vary considerably, for example
some charge fees and exist to make a profit, while others
are strictly operated by volunteers and don't charge fees
for their services. Some services are certified or accredited,
and others are not. Some guarantee confidentiality, and
unfortunately, others do not.
If your debt situation has not yet reached a point of no
return, credit counseling and debt management may be the
best option for you. This is the way it works:
* Check out a variety of counseling services, both in
your community and on the Internet to determine which
best suits your needs. Avoid those that charge high fees,
do not guarantee your privacy and that don¡¯t have any
credentials or accreditations to offer.
* Make an appointment with the agency of your
choice. When you go to the appointment, take as much of
your paperwork and documentation with you as possible,
i.e. proof of your expenses and income, along with
verification of the debts you owe.
* The counselor will review your situation and develop
a plan to help you pay off your bills. Legitimate counseling
services can often persuade your creditors to take less than
the total amount you owe and arrange for longer periods of
time to pay the debt off.
* Instead of paying your bills directly, in most cases,
you make one monthly payment to the counseling service,
which then distributes that amount among your creditors
according to the agreements they have worked out. The
arrangement leaves you enough money to live and halts
collection procedures. Over a period of time, all your bills
are paid in full and you essentially have a new start,
provided you don't get yourself back into additional debt in
the meantime.
On the other hand, if you have too much debt and your
creditors are not inclined to work out payment
arrangements with you, the best possibility may be
declaring bankruptcy. There are numerous bankruptcy
attorneys and, again, it behooves you to shop around to
obtain the best possible services at the least possible price.
It is wisest to work with an attorney who does a lot of
bankruptcy work because he or she will be most familiar
with the rules and regulations as well as with the judges
and bankruptcy trustees who work in the local system. A
good attorney will know what the trustees and the courts
will allow and what they won't, and will be able to advise
you as to your best options.
There are two kinds of bankruptcies available to individual
debtors. Those are Chapter 7 and Chapter 13. Chapter 7
is a complete discharge of all nonsecured debts, and some
secured ones, generally including everything except taxes
and school loans. The debtor generally has to give up
anything of value that can be sold to pay his or her debts,
although in most cases a person's home and their primary
transportation are exempted. In a Chapter 13, nothing has
to be given up, but the debts have to be paid in full. The
court simply works out a repayment plan and instead of
paying the money to your debtors, you pay it to the
bankruptcy trustee who then distributes it to the creditors.
There are advantages and disadvantages, as well as
eligibility requirements, for both types of bankruptcy and
the bankruptcy attorney can best advise you which option
will work better in your particular situation.
Whether you choose credit counseling or bankruptcy, either
one can help you eliminate debt and get back on your
financial feet. Both can stop collections procedures and
eliminate annoying and harassing phone calls from
collectors. The bottom line is, you don't have to continue
suffering; there are ways to get out of the debt situation
and begin again. The most important thing is, once you are
out of debt, carefully manage your money so you don't land
back in the same situation again.
About the Author
Ethan Hunter is the author of many credit related articles. If you are looking for help with Payday loan or any type of faxless loans please visit us at http://www.PaydayLoanChoice.com
Article Source: http://www.simplysearch4it.com/article/7519.html
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| Some other articles by Ethan Hunter | |
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