Debt Management Programs and Bankruptcy

: Reese Baker & Associates

  Filed under: Debt

Debt

Credit counseling agencies have sprung up around the United States since the passing of the 2005 bankruptcy laws. This law requires debtors to receive debt counseling before their bankruptcy can be completed.

While it sounds like a good idea, many agencies give biased advice so they can receive a commission from the credit card companies.

Most of the funding for these credit counseling agencies comes from the credit card industry. The employees collect fees from the people coming in looking for services, and the employee receives a commission from the credit card companies for every repayment plan they set up.

One Size Fits All

Some agencies treat all debt the same. These agencies recommend a debt management plan. The agency collects your money and distributes the money to your creditors. Often these monthly payments are large, and the debtor is unable to keep up with the payments. If your counselor gets a monthly fee for handling your money, you do not want to enter into any debt management plans with this agency. This is a conflict of interest and not in your favor.

The counselors at these agencies are often reluctant to talk about the drawbacks on signing up for a debt management plan but will eagerly discuss the disadvantages of bankruptcy.

Good Advice

Attending these court-approved counseling sessions during your bankruptcy process can do you some good by giving you advice on how to better handle your credit.

If you would like more information about credit counseling and how it relates to bankruptcy, contact a Hidalgo County bankruptcy attorney today to find out how you can eliminate all of your qualifying debt.