• Bankruptcy vs Credit Counseling

As trusted bankruptcy lawyers in Fort Worth and Bedford, Texas, we at the Sherman Law Firm feel obligated to provide our clients the best ways on how to clear their debt, prevent lawsuits, and protect their valued assets. In some cases, bankruptcy is not always the clear cut option. Credit counseling comes first before filing for bankruptcy and sometimes a few sessions with an expert could be enough to help you settle your finances.

Here is a quick comparison of bankruptcy and credit counselling and how they can help you as a debtor.

Why Credit Counseling?

Credit counseling lets you pay off your debt without letting your credit score take a serious hit. A professional credit counseling service will set up a debt management plan for you to pay off your existing debts at a pace that you are comfortable with. At the same time, your third-party credit counseling service should be able to help in contacting and dealing with your creditors and showing them your intent to pay.

A well-crafted debt management plan often takes 3-5 years to complete. During that time the debtor is still eligible for mortgage and auto loan with still favorable interest rates. The best part is, once the plan has been completed, you will leave with a less bruised credit report.

Why Bankruptcy?

The two main options are Chapter 7 Bankruptcy, or the liquidation of your debts, or Chapter 13 Bankruptcy, or the restricting of your existing debts. Both are geared towards discharging majority of your debts and giving your financial status a new breath of life.

After attending credit counseling and you can tell that you will not be able to meet the proposed payment plans, it is then time to consider bankruptcy. Once you have started the filing process, notices of foreclosures, lawsuits, wage deductions, and repossessions are will be placed on hold. This goes the same for all the stressful calls, letters, and follow-ups from debt collectors.

Both bankruptcy and credit counseling are viable and sustainable legal options for you to consider in clearing your debt. For professional advice on which one should you choose, call us here at Sherman Law Firm, P.C. We would be happy to schedule a free consultation today.

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