Do I Need Debt Relief or Bankruptcy?

debt reliefBankruptcy and debt relief are two of the most popular ways to manage debt. Consolidation proponents often promote it as a way to protect your credit rating and save money by combining monthly debts into one easy-to-manage payment, while a Brooklyn bankruptcy attorney may recommend it for a fresh financial start. Here, you’ll learn how these two strategies differ, and with that information, you’ll be able to decide which is right for your situation.

Debt Relief

Debt relief, also known as consolidation, is a way to reduce monthly payments and get out of debt. Below are some of the pros and cons of debt consolidation.

  • Pro: an improved credit rating and reputation. Unlike Chapter 7 or Chapter 13 bankruptcy, consolidation doesn’t go into the public record. Although debt consolidation loans may appear on your credit report, they don’t lower your score like a bankruptcy does.
  • Pro: you keep your credit access. Unless it’s prohibited in the consolidation agreement, you can hold onto your credit cards. However, if you’ve already accrued a substantial amount of debt, you may not get any more credit.
  • Pro: lower monthly payments and interest rates. Consolidating your debts may give you lower rate and monthly payment, which will allow you to keep up with your other bills.
  • Con: you may lose your vehicle, home, or other assets if you use them as collateral.
  • Con: you may end up paying a lower interest rate, but the loan’s term is extended.
  • Con: there may be negative tax consequences. Depending on your financial status, any money you save with debt consolidation may be taxed as income. Credit card companies and lenders may report settled debts to the Internal Revenue Services, which they consider a source of income.


Through a Chapter 7 or Chapter 13 bankruptcy filing, you may restructure or eliminate some debts under the protection of the court. While Chapter 7 allows you to erase most of your debts, Chapter 13 gives you an extended period to repay them. Here are the benefits and disadvantages of working with Brighton Beach bankruptcy lawyers:


  • Advantage: You’ll be protected from creditors. The automatic stay keeps them from engaging in further collection attempts.
  • Advantage: you’ll get a fresh start by eliminating most of your unsecured debts. With Chapter 13, you’ll repay part of those debts via a court-supervised payment arrangement. Consult a Brooklyn bankruptcy attorney to learn more.
  • Disadvantage: your credit score will decrease. Depending on the type of claim you file, it may stay on your credit report for up to ten years.
  • Disadvantage: you may have to give up luxury and non-essential items in a Chapter 13 case. Furthermore, you’ll be on a tight budget for the foreseeable future, and you can’t get more credit without the court’s approval.

How We Can Help

Debt relief and Brooklyn bankruptcy are two of the most common debt elimination and reduction strategies. While consolidation is enough to help some people get out of debt, it’s not right for everyone. You can find out if bankruptcy may be right for you by talking to a local attorney with the Ursulova Law Offices.


Ursulova Law offices, P.C.

Contact Ursulova Law Offices, P.C. to find out how our NY Bankruptcy Attorneys can help you today. Our offices are located in New York, Brighton Beach, Brooklyn and Garden City.


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