Common credit counseling questions

The bankruptcy revisions put into law by 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. Under recent law, a person who completes pre-bankrputcy credit counseling must also be ready to prove it in court. Many consumers are not aware of the counseling provisions in the revised statute, and only find out about it when they get to court.

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Due to the complexity of a bankruptcy filing, many bankruptcy filers seek qualified legal assistance. Many consumers don't know that professional credit counseling is now mandatory for everyone who files for debt relief. For the average consumer, the prospect of seeking out debt relief in Federal court is daunting, and rightly so. Bankruptcy is intricate business; that's why a number of lawyers specialize only in bankruptcy law. You may continue to apply without an attorney, but you may not file without undergoing credit counseling beforehand.
 

Here are some frequently asked questions in regards to credit counseling and debt relief through the courts:

Is professional counseling expensive?

Counseling agencies are largely providing these sessions as a service; offering professional financial guidance for fifty dollars is not exactly profitable. The Federal government has set a suggested price for the counseling session of fifty dollars, which may be waived if you can't afford to pay it.

Can I go to any credit counseling agency?

Undergoing counseling by an agency that has not been certified by the Government will mean that your application for bankruptcy will be denied. The U.S. Trustees have criteria that must be met by any and all counseling companies, and not all meet the requirements. You may find a list of qualified organizations at the U.S. Trustees' Web site; qualifying companies will provide you with a certificate on completion of the counseling program. You must meet with a credit guidance agency that is certified by the U.S. Trustee's office.

Won't the agency simply attempt to talk me out of filing for bankruptcy?

In years past, many organizations have tried to talk debtors into enrolling in a costly debt management program instead of filing for bankruptcy. A few less than honest organizations have been caught trying to direct their clients into pricey debt repayment solutions. Ever since the new legislation has gone into effect, 97% of consumers have ended up filing for bankruptcy, which implies that many consumers are too far in debt to repay their debts, even with assistance from professional counselors. Debt management programs can be quite profitable for the consulting company, as they receive a part of the repaid debt.

Is it necessary to meet with the counseling agency in person?

You may meet in person or you may consult via the telephone or via the Web. Many counseling companies conduct group sessions using conference calls. You may talk with a financial professional in person if you want to or if it is easy for you to do so.

The recent debt relief is not entirely fair but the mandatory guidance provision was at least intended to help those with financial obligations. The purpose of professional help is to show you all of the options that are available to you so that you might make an informed decision about what is best for you personally. Professionals are there to assist you, guide you, and help you towards a better financial future. You may, if you wish, opt to pay your debts instead of filing for bankruptcy.