Credit Counseling and Debt Settlement versus Bankruptcy What is the stigma versus the reality of bankruptcy? Bankruptcy is a federal law. Since the 1800’s the premise is that if it will take you more than 5 years to pay off your credit card debts then you’re an indentured servant to creditors and you deserve relief.

How to know if bankruptcy is right for you? If your unsecured debt is more than 30% of your income you’ll never pay it off; if you’re making ,000 and your credit card debt, private loans and medical bill payments are more than ,000 a year, you’ll never pay it off. If you feel like you’re a captive to your creditors, and you have no room to buy tires, clothes, prescriptions or are feeling pressured to pay your creditors more than you’re able to each month, bankruptcy may be your best option.

What is the difference between debt negotiation and credit counseling? Credit counseling is a legitimate option to bankruptcy. They take your credit card debt, consolidate it and put you on a 5-7 year payment plan. They’ll tell you if you qualify or if bankruptcy would be better for you.

Debt negotiation — you have to save up money to pay your creditors something. In many cases creditors will sue you, some creditors won’t negotiate and even if you are successful, your credit can be damaged for 7-10 years because your credit card history is based on timely payments.

In bankruptcy, two years after you will have restored your credit — with a credit score in the 700’s you can buy a home after bankruptcy with a FHA loan, buy a car after bankruptcy at 6% interest.

How to choose the best bankruptcy for you? Bankruptcy is based on the type of debt you have. If you have unsecured debt, Chapter 7 would be best for you; if you’re facing foreclosure, tax problems or a second mortgage you want removed, Chapter 13 may be your best option.

We also offer free consultations. Call Kevin Heupel at 720-319-8900 or visit to talk about your options.
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