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Credit counseling or bankruptcy?

Virginia residents who are concerned about personal debt and cash flow sometimes need outside assistance in managing their money. Fortunately, help is available from professionals who can help consumers review their finances and develop strategies for getting back on track.

Many people may not realize just how bad things really are. Many experts believe that signs of being in serious debt, or having money management issues, include living from paycheck to paycheck, routinely making late payments on bills and living in fear of creditor harassment.

For these individuals, credit counseling may be a good first step in addressing their problems. Qualified credit counselors can review the debtor's financial situation and make recommendations regarding developing a budget, controlling spending and negotiating with creditors. In some cases, a credit counselor may be able to assist a client in lowering interest rates, settling debts, or creating a long-term repayment plan.

Unfortunately, standard debt reduction techniques won't work for some individuals. Their debt load is too high, and their income is too low for repayment plans to work. In these cases, bankruptcy may be their best option. Under Chapter 7, a person's non-exempt assets are liquidated with the proceeds going to creditors. Much of the filer's remaining unsecured indebtedness is then discharged. Filing puts at least a temporary halt to collection activities and creditor harassment as well.

While credit counseling is actually a requirement prior to filing for bankruptcy, it is also true that debtors may benefit from speaking with an experienced bankruptcy attorney. Legal counsel can explain the eligibility and other requirements of the chapter while exploring other methods of debt relief that may be available.

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Bowen Ten Cardani, PC

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