People often get to a place where they simply can’t pay their

bills, especially in today’s economy which is not particularly

sympathetic toward the poor or even the middle class. Inflation

has impacted nearly every facet of daily life including food,

gas, rent, clothes, utility bills and more. At the same time,

salaries, especially in the lower ranges, have utterly failed

to keep pace. When you get to the place where you cannot pay

your bills and have money left over for food and other

necessities, there are some hard decisions that have to be

faced. The options are credit counseling and debt management

services, or bankruptcy. Both have their pros and cons, so

which road to take depends largely on the individual and how

severe his or her financial problems have grown.

There are numerous credit counseling/debt management services

available, both in most local communities and over the

Internet. The services vary considerably, for example some

charge fees and exist to make a profit, while others are

strictly operated by volunteers and don’t charge fees for their

services. Some services are certified or accredited, and others

are not. Some guarantee confidentiality, and unfortunately,

others do not.

If your debt situation has not yet reached a point of no

return, credit counseling and debt management may be the best

option for you. This is the way it works:

· Check out a variety of counseling services, both in your

community and on the Internet to determine which best suits

your needs. Avoid those that charge high fees, do not guarantee

your privacy and that don’t have any credentials or

accreditations to offer.

· Make an appointment with the agency of your choice. When you

go to the appointment, take as much of your paperwork and

documentation with you as possible, i.e. proof of your expenses

and income, along with verification of the debts you owe.

· The counselor will review your situation and develop a plan

to help you pay off your bills. Legitimate counseling services

can often persuade your creditors to take less than the total

amount you owe and arrange for longer periods of time to pay

the debt off.

· Instead of paying your bills directly, in most cases, you

make one monthly payment to the counseling service, which then

distributes that amount among your creditors according to the

agreements they have worked out. The arrangement leaves you

enough money to live and halts collection procedures. Over a

period of time, all your bills are paid in full and you

essentially have a new start, provided you don’t get yourself

back into additional debt in the meantime.

On the other hand, if you have too much debt and your creditors

are not inclined to work out payment arrangements with you, the

best possibility may be declaring bankruptcy. There are

numerous bankruptcy attorneys and, again, it behooves you to

shop around to obtain the best possible services at the least

possible price.

It is wisest to work with an attorney who does a lot of

bankruptcy work because he or she will be most familiar with

the rules and regulations as well as with the judges and

bankruptcy trustees who work in the local system. A good

attorney will know what the trustees and the courts will allow

and what they won’t, and will be able to advise you as to your

best options.

There are two kinds of bankruptcies available to individual

debtors. Those are Chapter 7 and Chapter 13. Chapter 7 is a

complete discharge of all nonsecured debts, and some secured

ones, generally including everything except taxes and school

loans. The debtor generally has to give up anything of value

that can be sold to pay his or her debts, although in most

cases a person’s home and their primary transportation are

exempted. In a Chapter 13, nothing has to be given up, but the

debts have to be paid in full. The court simply works out a

repayment plan and instead of paying the money to your debtors,

you pay it to the bankruptcy trustee who then distributes it to

the creditors. There are advantages and disadvantages, as well

as eligibility requirements, for both types of bankruptcy and

the bankruptcy attorney can best advise you which option will

work better in your particular situation.

Whether you choose credit counseling or bankruptcy, either one

can help you eliminate debt and get back on your financial

feet. Both can stop collections procedures and eliminate

annoying and harassing phone calls from collectors. The bottom

line is, you don’t have to continue suffering; there are ways

to get out of the debt situation and begin again. The most

important thing is, once you are out of debt, carefully manage

your money so you don’t land back in the same situation again.