Bankruptcy or Credit Counceling??

Question

If you have been through either and have any advise, please help. I need to get on a realistic budget. I'm afraid I won't make bills this month.

Answer 1

I have been through both.

Credit counselling did not help. Here is how it is supposed to work. You give all of your info to some company & they work with your creditors to reduce your monthly payments (sounding familiar?). Here is how it really works. Some of your creditors will participate in the program and will reduce or eliminate your interest. The ones who do not participate will either leave your interest where it is or may even raise it (some of mine did). They will all report to the "Big 3" credit reporting agencies that you have been accepted into a special payment program, which will have a severe negative impact on your credit. They will also cancel your accounts. Meanwhile, the credit councilling company will be charging you a fee each month for each account that they are handling for you. All of the money will be due at once, instead of spread out at different times as your bills are now. They will debit your checking account. My net savings each month ended up being less than $50, and my credit was ruined. Before I started the program I was over extended, but had good credit.

Bankruptcy laws have changed, but you can still file. Credit card debt that has been incurred within the last 6 months (I think, check with a bankruptcy lawyer to get accurate info on the new law) is not eligible for discharge.

If it is a temporary situation that you are faced with you may want to call your creditors and explain it to them and see if you can work something out. If not, call a bankruptcy lawyer. Many will speak with you on the phone for no charge.

Good luck to you.

Answer 2

I have been a financial analyst for years and perhaps if this is only the first month that you cant make your bills, you can play with some numbers still . do you have a steady income ? do you have credit card debt ? do you have a good car? only use bankruptcy as an absolute last resort.

Answer 3

Bankruptcy no longer discharges your debts. Try Credit Counseling, but find a reputable one.

Answer 4

I will seek bankruptcy if what you owe is more that 50% of your yearly salary. I will seek counseling if it is less.