Bankruptcy Versus Credit Counseling: Which Is Better?

You have tons of debt and it is overwhelming your finances and even yourself. How do you address this issue? There are two options that you can choose. First, you can ask for guidance from a certified credit counselor and you can also go to a bankruptcy attorney. Sometimes, when push comes to shove, people with incredible debts go to bankruptcy lawyers. There are a number of reasons for choosing such an option.

The first option, the credit counselor, is designed to pay off the credit card debts within a time frame of 5 years. This method veers away people from impending bankruptcy. A lawyer on bankruptcy can offer individuals a wider scope of options in order to address their financial woes. Also, one reason why the first option is not always the best option is that it does not lead to the expected results even if you hope for the best. Sometimes, we have to embrace the worst.

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Statistics from previous years prove the point made on getting a credit counselor. Of the millions who have tried to get counseling, only 1/3 of the population was able to handle their financial situation securely. The other 1/3 of the population, sadly are too far off from their debts. Some of these people have very little income to make the plan work and some of them already have issues such as gambling, alcoholism as well as drug addiction. The last third of the population were enrolled to such plans but they dropped out right after.

Let's be honest, not all people can survive with the repayment plans offered by credit counselors. Sometimes, repayment just shows you how big your debt is and how small your salary is. When that happens, it can be too difficult to fight bankruptcy. For some, embracing chapter 13 might be the most effective way to address the situation. With Chapter 13, people can be protected from creditors and at the same time, establish a five year repayment plan. After that period, all debts would have been erased already.

Of course, that does not mean everybody who files for bankruptcy can clear their credit back to square one. There is also high failure rate with this option. One of the best ways to address your credit issues is to do it on your own as much as you can. If you can minimize all expenditures and track all debts and bills, this can be a good start for you. Also, do not be afraid to take on all options. If one does not work, head to the next.

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