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Credit Counseling vs. Bankruptcy

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What's the difference? Many people going through rough financial times may have trouble focusing on their options, especially with the stress and threat of potential outcomes. But knowing what is best for you means knowing the pros and cons of each option, specifically credit counseling and bankruptcy

When analyzing your monetary situation, your first option may be credit counseling. Credit counseling is a service you pay for to help review your existing finances. The accredited credit counseling agency then designs budget and a repayment plans which is approved by your creditors. Depending on your situation it could take a few months to a couple of years to complete your plan.

Credit counseling may reduce your debt from growing exponentially, but they cannot erase debt or alter bad credit reports. Unfortunately, many people have experienced bad credit prior to completing their plan. In addition credit counseling is provided by for-profit agencies and the services can often be expensive and can cost more than hiring an attorney. Lastly, receiving credit counseling does not stop debt collectors from harassing.

Bankruptcy however is different, and is a legal process. Once filed in court your debts can be discharged meaning your creditors must stop any debt collection. In addition your credit accounts will be closed and any unsecured debts are reduced or eliminated.

Nevertheless bankruptcy can be reported on your credit report for up to 10 years, and can damage your credit score.

Either way both options can help you with different intensities of bad finances and debt. But it is important to research both before deciding because they have significantly different pros and cons depending on your circumstance.

We at Timothy J. Sierra Attorney at Law would like to state that our blog posts and links, on our web page or any other social media outlet, to any other web pages are not intended for legal advice. We are not responsible for third party website information. If one is in need of legal advice please contact an attorney directly.

Source: Debt Help | Features of Bankruptcy & Credit Counseling

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  • "When I first came to the decision to file for bankruptcy, I had no idea where to start. I began researching attorneys on the internet and came across the information for Tim Sierra. Since he specialized in bankruptcy and had a lot of experience......"
  • The process of going through bankruptcy could be very overwhelming but Tim made me feel at ease and I felt that my needs were being taken care of. I truly feel that he had my best interests in mind and the lines of communication were always open....
  • "I had to file a Chapter 7 bankruptcy. I didn't know anyone who could refer someone so I took a chance and just looked on the Internet. I don't remember exactly why I chose Mr. Sierra, but I am glad I did..."
  • He was honest, straightforward, and hard-working. In my case I ended up with some extenuating circumstances and he handled the matter professionally even though I'm sure the work probably exceeded what he originally felt it would be....
  • I don't ever write reviews, and I had no prior relationship with Mr. Sierra. This review is simply being written as a service to others that Mr. Sierra is an excellent attorney and should be considered for your needs if you need one....
  • "I'm very happy to have been referred to Tim for my Chapter 7 filing. He was knowledgeable in his field and very responsive in replying to any questions or concerns I had. Tim was also very accommodating with meeting times..."
  • " I recently was in need of Mr. Sierra's services and I found him to be very understanding and helpful in my particular circumstance. He met with me and explained everything in full detail and also answered every question that I had....."
  • " I recommend Timothy Sierra a loyal and dependable lawyer. When you talk to him you feel that you are with a friend or a member of your family. Timothy is able to lead you in every step of the process. Good job Timothy."
  • " Bankruptcy is a private and personally devastating life event. Timothy Sierra and his assistant, Nancy, made the process as painless as possible. They kept in close contact via phone and email so I always knew what was happening in my case...."
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