Many Florida residents are talked out of filing for bankruptcy with stories of how it will ruin their credit and make it impossible to rebuild financially. They seek other debt relief options through credit counselors and other supposed debt management companies. Even if a program is not a scam, full of false promises and operated by less than honest players, it might not provide the answer for which many financially struggles individuals are looking.
Even legitimate credit counselors might not fully outline the benefits of bankruptcy to their clients. Furthermore, they often only deal with credit card debt. This means that other debts, such as mortgage loans, medical bills and student loans, are not dealt with at all. After spending months or years paying off credit card debt, those other financial obligations can remain an issue.
In addition, several things can cause the agreement to be terminated. For instance, most agreements require an individual to avoid obtaining additional credit during the term of the agreement. One missed or late payment can also derail the entire plan. There are also often monthly fees to be paid in addition to paying off debt, which can take years.
Bankruptcy is often a faster and less-expensive route to debt relief since many debts can be eliminated in addition to credit card debt depending on the circumstances. Other benefits, such as the ability to stop garnishments, lawsuits and foreclosures, are not available through a debt management plan, and creditors must stop harassing the filer during the proceedings. Before making any decisions regarding how to handle overwhelming debt, Florida residents should consult an attorney who can provide them with all of the options available along with the pros and cons of each. This way, whatever decision is made, at least they know and understand all of the possibilities and ramifications of their choices.
Source: dailyherald.com, “Do debt management plans work?“, Liz Weston, Aug. 7, 2016