Whether you are doing a debt consolidation, debt management, debt settlement, credit counseling, or bankruptcy, all negatively affect your credit. The secret they don’t want you to know: your credit will suffer if you are not paying creditors exactly like you agreed or exactly like they want. Debt consolidation, debt management, debt settlement, and credit counseling companies want you to pay them a fee in addition to what you pay on your debts. These payments are NOT improving your credit and in many cases the payment won’t cover the interest on the debt.
Bankruptcy can get you back on track to good credit faster and cheaper than any of the other options. Don’t sacrifice your financial future by using your savings or cashing out 401k’s and retirement accounts in an effort to stay afloat. Right now, you need to do what is best for you and your family. Things aren’t like they used to be. Your credit will recover after bankruptcy.