In today’s tough economic times, it’s not uncommon for people to have numerous debts and be pursued relentlessly by credit collections agencies. Many people erroneously believe that bankruptcy is the worst-case-scenario and instead opt for credit counseling, believing that it will repair their credit and give them a fresh start financially. Here are credit counseling myths you need to be aware of.
Credit Counseling Can Help You Discharge Debts
Unlike in a Chapter 7 bankruptcy, you cannot discharge your debts with credit counseling. While you may be able to obtain a settlement and pay off your debt in full for less than you actually owe, this is not considered a “discharged” debt. Under a Chapter 7 bankruptcy, some or all of your debt may be discharged without you having to pay anything on it.
Credit Counseling is Inexpensive
While some credit counselors advertise low rates, the majority of credit counseling services are costly. Often, families will be paying upwards of a hundred or two hundred dollars for credit counseling services, without ever seeing their actual debt go down or items removed from their credit report. Think twice before paying such a high fee for credit counseling. If you do decide to move forward, make sure to ask for a detailed report of the work that is being done every month on your credit.
Credit Counseling Will Hurt My Credit Less Than a Bankruptcy
Many people mistakenly believe that credit counseling won’t hurt their credit at all and that’s why it’s preferable to a bankruptcy. However, if nothing is being accomplished and negative items continue to remain on a credit report, the individual’s credit score still suffers and the debt is still there. Although a bankruptcy will put a temporary ding in a person’s credit score, it’s important to remember that it is just that — temporary. Often, people are able to start over with a clean financial slate and build their credit up after a bankruptcy much faster than they are able to after credit counseling.
Contact the Law Office of Howard Tagg Today
If you’re struggling with debt, you don’t have to do it alone. At the Law Office of Howard Tagg, we can help you explore your options for debt relief and can assist you in determining what path is ultimately going to provide you with the most effective results. Call today for a consultation to discuss your unique financial needs at (903) 730-6366.