Quick Answer: For someone with income issues causing debt problems, bankruptcy may be more effective than either debt settlement or debt management plans. When income remains unstable after 7+ months of missed payments, discharging debt through consumer bankruptcy allows faster financial recovery than attempting repayment plans.
Question:
Dear Steve,
I was laid off & late in my pregnancy when my job closed. I was on disability then when I finally went back to work I fell and went back on disability, over 7 months behind of my bills.
Every weekday I read the enforcement actions, filings and fine print the outlets skip, and turn them into the one or two moves that actually improve your position — a rate worth moving for, a fee you can refuse, a deadline to beat before it costs you.
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Is it better to settle my debt on my own or should I work with a debt management firm to pay them off?
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Gloria
Answer:
Dear Gloria,
I think trying to put the solution before the larger picture, is a mistake. You can use my Get Out of Debt Calculator to look at your various options but if the current debt is caused by an income issue then the smartest thing to do might be to consider discharging the debt through a consumer bankruptcy to allow yourself to recover and move forward more rapidly.
From what you shared, I can’t see how you will be better off in the near future unless your income substantially improves and you can pay off your debt and save for retirement at the same time.
Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
