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Is debt management as bad if not worse than bankruptcy? When I ask what the difference is they say you don’t have to go through the debt counseling as you would the bankruptcy. Either way it still damages your credit.

There are 3 debt relief solutions you may be considering and I just want to clarify the differences in each as far as the damage to your credit score is concerned. Note I am using the terms debt management and not debt counseling but it is two ways to describe the same thing:

1. Debt Management- This process should not have a severe impact on your credit score so long as your debt management company is reputable, pays your bills on time, and you stick with the payment plan they set up for you. This is not nearly as damaging to your credit score as bankruptcy.

2. Debt Settlement- This solution is very damaging to your credit score which is why many people use it as a bankruptcy alternative and it typically gets you out of debt much faster than debt management.

3. Bankruptcy- This has the worst affect on your credit score and the courts now mandate that you must go through a debt management program as part of the bankruptcy process. Bankruptcy has become more time consuming and coupled with the credit score damage, it is really the solution of last resort for most people.

So you can do debt management without bankruptcy but you can’t do bankruptcy without also going through a debt management program.