No, because with a debt management plan that you demonstrate a good faith effort to repay the debt by voluntarily seeking credit counseling and the establishment of a budget for the repayment of all balance due.
Under bankruptcy, you are either erasing the debt in full or setting up a payment plan to pay less than the balance due.
Your credit report may contain a notation that a count is under such a plan, but if you come to an agreement with a creditor, then hold your end of the bargain, your credit score may not suffer.
How a Debt Management Plan affect your credit score will depend on whether your lender mark your account as late. In some cases, it will not be because the lender does not want to work with you, but because it is unable to change the way its billing and reporting system is in place.
For example, your lender may agree to a reduced interest rate or the amount of the reduced payment, but if the software it uses will not change, it could automatically report your underpayments.
Another event that could hurt your credit score is to get involved with the consulting agency in bad credit. As you make payments to the agency to disperse, all the agencies send payments on time. Every late payment will appear on your credit report and lower your scores.
Be aware that the best and most reputable agencies, credit counseling is free. They will help you explore your options and decide whether a debt management plan is right for you, or if bankruptcy is the only answer. If you choose bankruptcy, then you will also need a qualified bankruptcy attorney.
Bankruptcy will stay on your credit report for 7 to 10 years, depending on the type of deposit that you qualify. However, a debt management plan will be deleted from your credit report once you have things under control and leave the plan. Even if you have posted late payments because of accounting glitches we have mentioned, those that fade over time and lose their meaning when followed by payments on time.
This alone could be a deciding factor if you plan to buy a home anytime in the next 7 years. Have bankruptcy on your report will keep your scores low and you could pay as much as a few percentage points or two more interest if you can even get a loan.
In the mortgage market today, only those with the highest scores are eligible, so it is in your interest to make decisions now that will affect your credit report and the most favorable credit scores over time .