What About Consumer Credit Counseling Agencies?
Credit counseling companies are not totally ineffective. But they can only offer limited solutions. They really can’t help you address mortgage issues, help you with IRS of Arizona Department of Revenue problems. They don’t even work with all credit card issuers.
What they can do is build out a tenable debt management plan for you. If you have a really small debt problem limited to credit cards, consulting with a counseling service might be a solid idea. The important thing is not to kid yourself and just spin your wheels putting off the inevitable. If fundamentally you can’t afford repayments beyond your living expenses, credit counseling isn’t going to help much.
Remember also that a credit counseling program may not be designed to actually eliminate your debts but to simply make it more bearable going forward. Other programs may help you get out in five years.
You have to ask yourself if you really want to wait five years before starting over. After all, Chapter 7 bankruptcy filers normally obtain a discharge in three months and can have great credit scores within eighteen months.
You should also keep in mind that the majority of nonprofit credit agencies are supported, at least in part, by the major credit card companies who obviously want to minimize the losses that they would otherwise sustain if you file bankruptcy. The companies want you in a non-profit credit counseling so that they can recover as much as possible from you.
The difficult thing to do is finding a credible service, executing the repayment plan. and actually following through. In any event, it helps to consult with a qualified bankruptcy attorney first to get a lay of the land and understand your options. The key is to use the right tool for the right problem.
What we see all too often is a debtor who comes to us after attempting consumer credit counseling and as needlessly spent thousands of dollars and put off the process of really starting over for months if not years. You have to wonder about programs that take money from the good people at American Express and Wells Fargo to help you deal with your debts. Please set a consultation with Phoenix Fresh Start Bankruptcy Attorneys if you have any questions at all about the relative merits of credit counseling versus bankruptcy. We are happy to help.