Bankruptcy Credit Counseling: What to Know Before You File

One of the most devastating things you can do to your credit is file for bankruptcy. Bankruptcy credit counseling is one way you can prevent this from happening. While some people view bankruptcy as an easy way out of debt, what they may not realize is that it stays on your credit report for many years. People with undischarged bankruptcies are usually unable to get loans and lines of credit. If you need to buy a home or a car, you may not be able to if you have filed for bankruptcy as it looks very bad to lenders. And many people also do not realize that there are some types of debts that cannot be removed by any chapter of bankruptcy, so bankruptcy cannot be viewed as a “one size fits all” type of solution.  Oh, and did you know that the courts need to approve you to file bankruptcy?  It is not a given that you can even file.

Bankruptcy Credit Counseling – So What Is The Answer?

Before taking such a drastic step, try credit counseling, or if you have filed already, look at bankruptcy credit counseling. There are non profit organizations, some of them Christian based, that can help you. There are also companies that charge a fee, but why use them when you can get the same services from a non profit counseling agency for free? The way they work is pretty much the same. Your income and your debt will be evaluated, and your creditors will be contacted by the counselor. They will attempt to reduce your debt costs and in many cases will be successful. Even by lowering interest rates or removing late charges you can save money.

In the process of bankruptcy credit counseling, after that, your debt will be added to get a grand total. This total will then be divided to come up with a monthly payment, which will go to the credit counseling agency. They will take the money and pay each of your creditors, which saves you time and hassle. You don’t have to worry about a payment that you cannot afford, just be honest with your counselor when discussing how much you can manage. With a lower amount, it may take longer to pay everything off but for many this is much easier. If your payment is too high you may not be able to make it every month which throws off your progress.

Bankruptcy Credit Counseling – Is It For Everyone?

So when it comes to bankruptcy credit counseling is a good alternative. Your credit will be far better if you pay your debts slowly through one of these organizations than if you remove them via a bankruptcy filing. Take everything into consideration before making a decision, as what works for one person or household may not be right for another. In a small number of cases, bankruptcy may be the better choice but this is a rare occurrence. Bankruptcy credit counseling is not for everyone but it may just be the financial answer you are looking for.