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Bankruptcy vs. Debt Counseling Comparison Chart

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There are a variety of tools available to allow you to get out of debt and rebuild your credit. Millions of Americans are involved in debt counseling. Consumer Credit Counseling is a bit of a misnomer. We view this industry as glorified debt collectors with good public relations. Ask yourself, what is the difference between a "debt collection agent" and a "consumer credit counselor?" One threatens you with wage garnishment, court judgments, and some even threaten to send you to jail (something which is entirely unethical and illegal). The other promises you a dream that you can get out off the debt treadmill and start over again. But in the end, they are both doing the same thing aren't they? They are getting your money.

Don't be fooled by the "non-profit" designation either. That's a nice word that makes consumers think it won't cost very much for the services of the consumer credit counselor. But it does not mean you will pay any less! It only means that the company and their crooked accountants make sure that the books reflect zero profit at the of the year. This does not mean that the owners of the company don't make exorbitant salaries for their services.

If it sounds like we are biased, we are. We despise phony consumer credit counseling agencies. Many of our clients come from counseling agencies who overcharged for their services and did not even come close to getting the results advertised. Many client's credit scores are even worse after they enroll in the service. That's not counseling. . . that is debt collection. Sure there may one or two satisfied debt counseling customers out there somewhere, but we have never met one.

The chart below is set up to compare the different chapters of consumer bankruptcy to credit counseling and plainly shows the advantages and disadvantages of each.

Chapter 7 Chapter 13 Credit Counseling
Deals with every debt debt that you have, including home loans, car loans, credit cards, taxes, medical bills and child support Yes Yes No
Allows for a debt-free fresh start in as little as 90 days Yes No No
Allows for the reinstatement of your driver's license is suspended for unpaid debts Yes Yes No
Can stop a foreclosure process on your home Yes Yes No
Places a legal protection around the debtor to STOP creditor harassment Yes Yes No
Requires all pending lawsuits to immediately STOP Yes Yes No
STOP garnishments and actually allows you to recover garnished funds being held by your employer Yes Yes No
Allows you to pay back all or a portion of your debt without interest Yes Yes No
Allows you to deal with debt WITHOUT borrowing against your home equity or retirement plan Yes Yes No
Allows you to obtain credit after the process is complete Yes Yes Yes
Allows you to lower your car payment No Yes No
Allows you to stop worrying about bills and collectors Yes Yes No
Allows you to surrender your home or vehicle without paying for them if you choose Yes Yes No
Repayment is based on your monthly budget not on what your creditors demand N/A Yes No
Drops the interest rate to 0.00% for unsecured repayment plans and STOP all finance charges and late fees N/A Yes No
STOP repossessions and foreclosures to allows you to sell for market value rather than being rushed into a quick sale at a lower price Yes Yes No
Same affect on your credit Yes Yes Yes
STOP the continued downward spiral of your credit score Yes Yes No
Levels the playing field with your creditors Yes Yes No
Allows you to go after your lenders for Unfair and Deceptive loan practices Yes Yes No
Deals with both secured and unsecured debt Yes Yes No