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Bankruptcy Vs. Debt Counseling: Which Is Better?

When faced with overwhelming debt, a first instinct might be to find a way to manage your debt load and get your balances down to zero. Some options in this regard include taking out a loan to consolidate debt, contacting your creditors directly and asking them to reduce your interest rates so you balance can be paid off faster, or seeking the advice of a debt counselor. Debt counselors can offer you advice on how to get out of debt, and stay that way, and often times will tell you they can lower your payments by negotiating with your lenders. However, many times not all of your lenders are willing to talk to a debt counselor on your behalf, and the benefits you were expecting never come to materialize.

If you are put in that position, you might end up owing more in fees and interest that what you originally had to pay, and that can make your financial hole get deeper. When that happens, turning to bankruptcy can help you make a fresh financial start. So, the question becomes, why not just file bankruptcy from the start? Here are some things to think about when you are considering bankruptcy vs. debt or credit counseling:

  • With bankruptcy you get the benefit of the automatic stay, which is a legal mechanism that prohibits lenders and collectors from contacting you the instant your case is filed. If you go the debt counseling route, you will still be contacted while a counselor tries to come up with a debt management plan for you.
  • Bankruptcy will eliminate your debt, or at least reduce the balance. The reduction in balance typically seen with debt or credit counseling is not near as great as what you can get with certain types of bankruptcy cases, so you end up paying more.
  • When you file bankruptcy, you are represented by an attorney who knows how to handle lenders and is aware of the legal consequences of filing. Debt and credit counselors are not normally licensed attorneys and thus should not be relied upon for legal advice.

We understand it can be hard to figure out what option is best for you when you have too much debt, and that is why we are here to help. Give yourself a break from the collection calls and the financial pressure that results from being unable to pay all of your bills by letting us handle your case. When you turn your case over to us we step in and field the calls, so you don’t have to worry every time your phone rings. Contact our office today for more information.

For more information about how to manage debt, contact us at We will help by coming up with solutions that work for you.

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