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

In The News:

---

Bankruptcy Reform

There are some new bankruptcy laws going into effect before... Read More

Are You SURE Your A Bad Debt?

Many people who seek the advice and guidance of debt... Read More

Individual Voluntary Arrangements- A New Alternative to Bankruptcy

This May, the Department of Trade and Industry in the... Read More

The Last Debt Solution Should Be Bankruptcy

A debt solution like bankruptcy should really only be used... Read More

Debt Getting You Down? - Make a List!

Debt is not much fun and when faced with it,... Read More

Debt and Your Dreams

You may not realize what that credit card bill is... Read More

Debt: Dont Pay Your Minimum Balance

Almost all Americans carry credit card debt. Actually, over 40%... Read More

Hide That Car! Fighting the Repo Man

Vehicle repossession may appear justified in circumstances where a person... Read More

Bank Like a Banker

The business of banking has changed dramatically over the last... Read More

Debt Consolidation and Personal Finances: Learn the Truth!

An inability to manage credit, growing debt and bankruptcy are... Read More

Reduce Your Debt

Do you want to reduce your debt? Having trouble paying... Read More

Life on a Debt Management Program

Signing up for a debt management program is easy; it's... Read More

Getting Past The Idea Of Budgeting & Saving Money

I'm sure you'll agree that budgeting, saving money, and eliminating... Read More

Bankruptcy: What the New Law Means to You

On April 20 of this year, President Bush signed a... Read More

Bankruptcy - Your Fresh Start

Most American consumers are living too close to the edge.... Read More

Credit Card Debt Elimination

Credit card debt elimination can be done with a good... Read More

Debt Validation: Do you have to pay ?

It happens all the time. Debt collectors try to collect... Read More

What is Bankruptcy?

Personal bankruptcy is a legal way to give people with... Read More

Personal Bankruptcy ? If Its Unavoidable, File Now

The Bankruptcy Abuse and Consumer Protection Act, signed into law... Read More

Top Ten Reasons People File for Bankruptcy

1. Eliminate the legal obligation to pay many of your... Read More

Slowing Spending - The Key To Your Debt Plans Success

Anyone who embarks on a debt reduction program should know... Read More

Tips To Take Control Of Debt Collection

Yes, debt collection tips can help. You may think you... Read More

Are You Beating Up On Yourself About Debt?

When you hear the word "debt", whats the first thought... Read More

Stop Debt Collectors

Can you stop debt collectors ? . . .You better... Read More

Use A Debt Checklist To Examine Where You Are

A Debt Checklist allows you to look at items and... Read More

Credit Counseling or Bankruptcy: Which is Best for You?

People often get to a place where they simply can't... Read More

5 Ways to Get Out of Debt

It has been said that everyday more and more people... Read More

Bankruptcy - The Easy Option?

Incredibly, since the changes in the bankruptcy law in April... Read More

IVA Information

If you're thinking about an IVA, it is essential to... Read More

Turning Bad Debts into Good Debts through Investing Fundamentals

If you've ever earned enough money to put some aside,... Read More

Tips For Saving Money

Still living from pay to pay? Or envying those great... Read More

Debt Elimination 2

The First Step To Debt EliminationRegardless of your personal and... Read More

Bad Credit Home Loan To Get You Out Of Debt

A "bad credit home loan" can help you climb your... Read More