Debt Management or Chapter 13?

If you have been troubled by mounting debts and have considered filing for bankruptcy, you may not be aware of all the options out there. Bankruptcy is a powerful tool for the settlement of debts and getting a fresh start on your financial future.

It is often the right solution; but it is not the only solution.

Programs for Repayment

Debt management is a program that looks at your debts and devises a repayment plan that keeps you out of bankruptcy court. It has advantages and disadvantages, like any solution. Among the advantages, it will generally not be as big a hit to your credit score as a bankruptcy would be. It allows for greater flexibility in repayment, as you focus on those debts that are most troublesome and hardest to repay. It also allows you to keep current lines of credit open, should you need to use them.

However, your bankruptcy lawyer will tell you that there are significant disadvantages as well. Firstly, though the credit hit might not be quite as large, debt management plans are still reflected by the credit reporting agencies. Second, debt management does not give you the two most powerful tools afforded by Chapter 13: the automatic stay, which stops creditors from all collection proceedings against you, and a legally binding agreement that debts discharged in bankruptcy will not be further pursued by the creditor.

If you are having trouble deciding which path to choose in your debt repayment strategy, consult your St. Petersburg bankruptcy lawyer. A bankruptcy lawyer will help you decide whether the protections offered by Chapter 13 are the right path, or if the flexibility of debt management is preferable in your case.

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