Bankruptcy vs. Credit Counseling: What Should I Do?Written by Tim Gorman
Credit Counseling and bankruptcy are both ways to relieve 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 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 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 loans are paid. Bankruptcy is very different.
| | How Do You Spell Debt Relief?Written by Tim Gorman
Of all problems possible in a marriage, finances cause most marital discord. Many singles consider finances to be their most worrisome issue. Many times this is due to a heavy debt burden. Several options exist to help people get debt relief from their unsecured debts. (Unsecured debt is not linked with a physical asset. Therefore, credit cards and medical bills are unsecured debts; a car loan or a mortgage are secured debts.)One option for debt relief is bankruptcy. While unsecured debts are indeed discharged, long-lasting black mark on your credit report (up to ten years) makes bankruptcy less than ideal as a form of debt relief. Further, changing bankruptcy laws will make it more difficult to file. Bankruptcy should only be a last resort. It is not a quick fix. Another option is debt consolidation. Debt consolidation combines your existing loans into one loan. While this does away with late fees and over-the-limit fees, very little is done to reduce amount of debt or to renegotiate interest rates. Further, this uses something as collateral, such as your house. If you still have trouble paying, you could lose your house to foreclosure. A third option of debt relief is debt settlement. The debt settlement company negotiates with credit card companies to agree to settle for a lesser amount owed, often pennies on dollar, of both interest and principle. A debt settlement company also acts as middleman between debtor and credit card companies, eliminating phone calls that border on harassment. A downside to debt settlement is that many debt settlement companies advise you to stop paying your monthly bills altogether in order to force credit card companies into settlement. While this may work for some credit cards, others may be just as likely to take you to court for non-payment, and debt settlement companies take no responsibility for such action.
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