Should I work with a credit counselor?

 Posted on November 21, 2020 in Chapter 13 Bankruptcy

If you currently have more debt than your income can support, you may feel tempted by many of the expensive debt settlement ads you come across. These professionals sometimes do fulfill their promises to reduce or eliminate your debt, but consider credit counselors before making a final decision.

When completing the bankruptcy process, you may need to complete credit counseling courses before moving forward. Non-profit organizations often provide these courses as well as services to assist with financial literacy. Some people who complete the courses get finances back on track and may not need to go through with the bankruptcy process.

What are the benefits of hiring credit counselors?

When you need to work on your finances, no price sounds better than free. Credit counselors rarely charge fees for advice. The services they do charge for may still cost a lot less than hiring for-profit professionals. These include the following:

• Negotiation of lower payments and interest rates
• Debt management plans
• Workshops and courses
• One-on-one advice
• Potential fee waivers during severe hardship

How can you find a good credit counselor?

Registering as a non-profit does not automatically make a credit counseling agency a good one. They still need to do a good job. Experian recommends choosing agencies that received accreditation from the Financial Counseling Association of America or the National Foundation for Credit Counseling.

Whether you file for bankruptcy or manage to sort everything out with credit counseling, note that some debts remain exempt. Credit counseling agencies generally handle unsecured debt and bankruptcy generally does not erase student loans or child support.