Credit Counseling as an Alternative to Bankruptcy
Given the current poor state of the economy it is of little surprise that a new credit counseling service seems to start everyday. I have often wondered whether many of the individuals involved in the home mortgage are the same people who are now starting credit counseling services. Business tends to go where the jobs are and there are currently plenty of jobs providing assistance to consumers in financial trouble. The point is, some of the same bad behavior that created the mortgage meltdown has migrated to credit counseling services.
Although I am a bankruptcy lawyer, not every person who walks into my office is in need of a bankruptcy. Some can be helped by a reputable credit counseling service. The trouble is determining which credit counseling services are reputable and which ones are just trying to make a buck at your expense. The internet is full of credit counselors who promise debt relief but fail to deliver.
Credit counseling at a minimum should include preparing a proper budget that determines whether an individual will be able to pay back the debt through a structured payment plan. If the budget does not balance, bankruptcy is in all likelihood the best option. Even in cases where bankruptcy is the best option, good credit counseling can be invaluable to teach individuals how to properly manage their money in the future. In completing a bankruptcy for our clients our goal is to give them a fresh start.
The best bet for a consumer looking for a reputable credit counseling service is to check with the Minnesota Attorney General’s Office, the Federal Trade Commission and the Better Business Bureau
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