Would it be wiser to do credit counseling, bankruptcy, or credit reconstruction, which would hurt less and why

Answer 1

When you file bankruptcy it stays on your credit report for 10 yrs and after you file you have to slowly start building your credit again (about a year or so after your file). With credit counseling, they close your accounts and you pay them off in 3 or 4 yrs. I filed bankruptcy in 1993 and then started getting into trouble again in 2001 when I did credit counseling (I paid off $25K in those 4 yrs). Credit counseling is better for you because you're paying your creditors off and it shows a consistent payment record so it actually hurts and helps at the same time. Absolutely avoid bankruptcy if you can.

Also, I had another creditor who I couldn't afford to put on the credit counseling or I wouldn't have been able to make the payments (they took it directly from my bank acct) so I called the creditor directly and they closed my account and worked out my pay off with me. (This won't work with Chase, Amex, Sears or Discover, believe me!) If it's just a few ceditors, try calling and working out something with them first. If you can't get what you need, try the credit counseling. And if you do try credit counseling, shop around! I spoke to four different credit counseling services and they all had different payment options. Choose the one that works best for you. My credit score is back up to 688 now so it does work. Good luck.

Answer 2

How much debt are you in? Bankruptcy would hurt the most. Credit counseling will have an adverse affect on your credit score. I am not sure what credit reconstruction would do. Just a note, a credit counseling agency can do the same things you can, but you can do it for FREE. Examples: settling with the collection agency on accounts, negotiating decreasing your cc interest rates, waiting for your state's statute of limitations so the negative accounts can fall off rather than paying. You can go to Oprah.com and take a look at her Debt Diet section to give some helpful tips or google some of the terms I have mentioned. You can also go to http://www.creditinfocenter.com/.

Answer 3

It's not which would hurt the most, but which would give you peace of mind? If you are being hounded by collection agencies and you owe 4x what you make, then claim BK. If you can pay it off within 2-3, then go into credit counseling. Don't worry about the claim that BK stays on your credit report for 10 years....you can get a FHA mortgage 2yrs out of BK, and many have re-established credit by getting cars and other loans. BK is not the black mark it used to be. Of course, avoid it if there are other alternatives, but it's there as an option.

Answer 4

Don't claim bankruptcy if you can help it. That will ruin your credit for a very long time. try either one of the other two.

Answer 5

credit counseling because it is temporary on your credit bureau