Under federal bankruptcy law, before a person can complete a bankruptcy case, he or she must meet with a credit counseling organization. In fact, one of the required forms before a person’s debts can be discharged in bankruptcy is a certificate confirming that he or she has had the meeting with the credit counselor. This meeting is supposed to help a person considering filing for bankruptcy assess their debt situation, develop a personal budget and, sometimes, consider alternatives to bankruptcy. There are several qualifications one should look for when considering credit counseling firms. The U.S. Trustee Program has a list of approved credit counseling organizations.
Best Credit Counseling Firms
Not all credit counseling organizations are out to help the consumers. Some organizations may actually cause a person to fall further into debt due to the organizations unethical business practices. It is important to keep a few things in mind when selecting a credit counseling organization to work with, before or after declaring bankruptcy.
According to the Federal Trade Commission (FTC), a typical session with an approved credit counseling service should last between 60 and 90 minutes. This is the average time it may take to go over the debtor’s financial situation. Debtors should be wary of meetings which take a much shorter amount of time, for example 30 minutes, as this may be a sign of a bad credit counseling organization, especially if the brief meeting is coupled with a hard sell for the organization’s debt management plan services.
A debt management plan is a way for a debtor to pay creditors through one monthly payment made to the credit counseling organization. The organization is supposed to negotiate lower interest rates to keep the debts owed by the debtor manageable. The organization charges a fee for these services.
If the credit counseling organization also charges high fees, the debtor should avoid it, as this could get the debtor in further trouble if he is unable to pay. For the first consultation, if a debtor is suffering financial hardship, he may ask for a fee waiver before the session starts. A good credit counseling organization should go over all fees before charging any fees.
The FTC offers a list of questions which a debtor should ask before selecting a particular organization. Some of these questions include an individual counselor’s training and accreditation, what fees are charged, and whether or not the counselors are paid based on services sold to the debtor.
Overall, if you are seeking credit counseling in preparation to file for bankruptcy, make sure you only use providers that are approved by the U.S. Trustee Program. It is also a good idea to check out any company with the Better Business Bureau or a similar organization, to check for past complaints.
If, after evaluating all your options, you decide to declare bankruptcy, you can get started without an attorney. Use an expert, low-cost, and fast legal document preparation service to help you fill out the required forms. Unfortunately our office no longer offers bankruptcy document preparation services, However, if you are in the California Central District, the court offers a free online document preparation service which you may want to check out.