Why Bankruptcy is better than Credit Counseling
Here are some of the advantages of bankruptcy over credit counseling:
- It can eliminate most of your debt. In Chapter 7 bankruptcy in McKinney Texas , you may be able to discharge (eliminate) most of your unsecured debt, such as credit card debt, medical debt, and personal loans. In Chapter 13 bankruptcy, you may be able to repay some of your debt over a 3-5-year period, but you will still be able to eliminate a significant amount of debt.
- It can stop creditor harassment. Once you file for bankruptcy, your creditors are legally prohibited from contacting you to collect your debt. This can be a relief if creditors are harassing you.
- It can give you a fresh start. Once your bankruptcy is discharged, you can start rebuilding your credit.
However, bankruptcy also has some disadvantages, including:
- It can damage your credit score. A bankruptcy filing will stay on your credit report for 7-10 years, making it difficult to get approved for loans or credit cards in the future.
- It can be expensive. Filing for bankruptcy can be costly, and you may also have to pay for legal fees.
- It can be time-consuming. The bankruptcy process can take several months to complete.
Here are some of the advantages of credit counseling over bankruptcy:
- It can help you save money. Credit counseling agencies can negotiate lower interest rates and monthly payments with creditors.
- It can help you get out of debt faster. You can focus on paying off your debt by making one monthly payment instead of juggling multiple payments.
- It can help you improve your credit score. If you make all your payments on time, your credit score will improve.
However, credit counseling also has some disadvantages, including:
- It may not eliminate your debt. In most cases, you will still have to repay your debt, even if you work with a credit counseling agency.
- It can be challenging to stick to a debt management plan. If you miss a payment, you may default, and your creditors may contact you again.
- It can take several years to complete a debt management plan.