Credit Counseling or Bankruptcy: Which is Best for You? - Debt-Relief

Credit Counseling or Bankruptcy: Which is Best for You?

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.

Ethan Hunter is the author of many credit related articles. If you are
looking for help with Payday Loans or any type of credit issue please
visit us at http://www.PaydayLoanChoice.com

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