Credit counseling common questions

For the average consumer, the notion of seeking debt relief in court is daunting, and rightly so. Debt relief is complicated business; that's why a lot of attorneys specialize only in bankruptcy law. Due to the complexity of a bankruptcy filing, many filers seek qualified legal assistance. You can still apply without a lawyer, but you may not file without seeking credit counseling beforehand. A great number of debtors do not realize that credit counseling is now mandatory for everyone who files for bankruptcy.

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Under current law, a person who completes pre-bankrputcy credit counseling must also be ready to verify it in court. The bankruptcy filing changes put into law by Both houses of Congress in late 2005 are now entrenched in law, and one of the requirements is that a debtor filing for bankruptcy must first submit to credit counseling. A great number of debtors are uninformed about the counseling requirements in the revised legislation, and only realize it when they get to court.
 

Below are some frequently asked questions regarding credit counseling and bankruptcy court:

May I go to any credit counselor?

The U.S. Trustees have criteria that must be met all counseling companies, and not all of them meet the requirements. You must meet with a credit guidance agency that is authorized by the U.S. Trustee's office. You may find a list of certified companies at the U.S. Trustees' Internet site; appropriate agencies will provide you with a certificate upon completion of the counseling program. Seeking out counseling by a company that has not been authorized by the Government will mean that your application for bankruptcy will be refused.

Do I have to make an appointment with with the counselor in person?

A lot of counseling companies conduct group meetings using conference calls. You may talk with a counselor in person if you desire to or if it is convenient for you to do so. You may meet in person or you may talk over the telephone or via the Internet.

Won't the credit counselor just try to talk me out of applying for bankruptcy?

Since the new debt relief legislation has gone into effect, 97% of debtors have ended up applying for debt relief, which suggests that a lot of people are too far in debt to pay their way out, even with assistance from professional counselors. Debt repayment programs can be quite profitable for the consulting company, as they receive a share of the repaid debt. In the past, many companies have attempted to talk consumers into enrolling in an expensive debt management program instead of filing for bankruptcy. A number of disreputable agencies have been caught attempting to steer all of their clients into pricey debt repayment programs.

Is professional counseling pricey?

Counseling organizations are largely providing these sessions as a service; providing professional guidance for $50 is not particularly profitable. Congress has set a proposed price for the counseling session of $50, which may be waived if you cannot afford to pay it.

The purpose of professional guidance is to show you all of the choices that are available to you so that you might make an informed decision about what is best for you. You may, if you like, opt to pay your debts instead of filing for bankruptcy. The new debt relief is not completely fair but the mandatory guidance clause was at least designed to assist those with debt troubles. Professionals are there to assist you, guide you, and help you towards a better financial future.