Archive for September, 2005

What’s the Difference between Credit Counseling and Bankruptcy?

Credit counseling is an informal process where you and your credit counselor work out a repayment plan with your creditors.
Personal bankruptcy is a legal process where the court legally discharges your debts.
There are two big disadvantages to bankruptcy, as compared to credit counseling.
First, bankruptcy is a legal process.  The courts are involved, so it is recommend that you deal with a bankruptcy attorney, which can increase the cost of the process.
Second, you may lose some of your assets if you go bankrupt.  With a credit counseling debt management program, the courts are not involved, and you do not lose any of your assets, so if possible it is generally preferable to avoid bankruptcy.