Many have seen the commercials for credit counseling services and ask, what is the difference between credit counseling and bankruptcy protection?
Credit Counseling Services
With so many struggling to pay their bills, credit counseling services have popped up across the nation offering to help people consolidate their debt into one or more affordable payments. This approach involves paying a credit counselor to reach out to your creditors to reach a new repayment plan – something an account holder can also do at no cost – which may or may not solve your financial difficulties.
Typically a debtor will enter into a new and binding agreement to pay the debt, often long into the future to make payments more affordable. Any failure to pay as agreed will result in legal consequences. When exploring this option, it is important to ask questions and read the fine print before entering into any agreements. Take time to compare the differences between what a credit counselor is offering when compared to other options such as bankruptcy protection.
Bankruptcy Is Your Legal Right | Chapter 7 Bankruptcy
Bankruptcy is a legal process that allows a debtor to discharge unsecured debt such as credit cards and medical bills to get a clean slate. Chapter 7 bankruptcy allows for a number of exemptions of personal property such as equity in a home or a car, before selling remaining assets to satisfy outstanding debt. At the conclusion of the bankruptcy process, any remaining debt is discharged aka erased allowing individuals and families to start anew. Chapter 7 is a good fit for individuals or families who have fewer assets and income, who are struggling to make ends meet because of debt.
Chapter 13 Bankruptcy Repayment Plans
Of course, even those with regular income struggle with debt, one emergency away from not being able to pay their mortgage, a payment on a needed car, or even groceries to feed their kids. When finances are already tight, a car repair or trip to the doctor can tip the balance between just barely getting by or not. In cases where an individual or family has a regular income and a number of assets they want to protect, Chapter 13 bankruptcy allows them to hold onto more assets while providing an affordable repayment plan over a 2 to 5 year. This approach differs dramatically from an arrangement entered into with a creditor as the time frame for repayment is defined (short term by comparison) and any remaining debt is discharged at the conclusion of the repayment period.
Contact an Experienced Bankruptcy Lawyer for Help Today
It is important to do your research, see what options are available to you to solve a difficult financial situation. If you would like more information regarding your options under bankruptcy protection, contact the Peoria bankruptcy law office of Charles E. Covey to determine if bankruptcy is a good strategy for you and your family at 309-674-8125. Attorney Covey will evaluate your particular situation and provide you with the information you need to solve your debt issues and get a fresh start.
