A. Credit and Debt Counseling Agencies (2)
But a debt management program also has two disadvantages when compared to Chapter 13 bankruptcy. First, if you miss a payment, Chapter 13 protects you from creditors who would otherwise start collection actions. A debt management program has no such protection and any one creditor can pull the plug on your plan. Also, a debt management program plan usually requires that your debts be paid in full. In Chapter 13 bankruptcy, you’re required to pay the value of your nonexempt property, which can mean that you pay only a smallfraction of your unsecured debts.
The combination of high consumer debt and easy access to information (the Internet) has led to
an explosion in the number of credit and debt counseling agencies ready to offer you help. Some
provide limited services, such as budgeting and debt repayment, while others offer a range of services, from debt counseling to financial planning.When choosing a credit and debt counselingagency, look for a company that is truly a nonprofit. Many for-profit outfits use names that sound like a nonprofit, such as “foundation,” to confuse you.And your inquiry shouldn’t stop there. Many of the unscrupulous credit and debt counseling companies have nonprofit status. These companies often try to get you to pay “voluntary contributions” up front or pay other fees. At a minimum, always ask about fees before agreeing to give your business to a particular counselor. And review the “Questions to Ask a Credit or Debt Counseling Agency,” below. Some experts caution against using even the legitimate nonprofit credit and debt counseling agencies companies. Critics of these companies point out that they get most of their funding from creditors.
(Some offices also receive grants from private agencies such as the United Way and federal agencies
including the Department of Housing and Urban Development.) Therefore, say critics, counselors
cannot be objective in counseling debtors to file for bankruptcy if they know the office won’t receive
any funds.
In response to this and other consumer concerns, credit and debt counseling agencies accredited
by the National Foundation for Consumer Credit (the majority of agencies are) reached an agreement with the Federal Trade Commission to disclose the following to consumers:
Taken From : Credit Repair by Attorneys Robin Leonard and Deanne Loonin
