When you are having trouble paying your bills, the last thing you need is for a credit counseling agency to add to your problems by taking your money and not providing the services you expected. It’s important to your wallet and your financial future to take the time to do the research necessary to choose a reputable credit counseling agency.
Personal bankruptcy requires credit counseling services for filers.
Credit counseling agencies provide advice on managing your money and debts. They can also help you improve your credit score, develop a budget, and can educate you on the best ways to manage your money. A counselor should meet with you in an initial session of at least an hour to determine your financial situation including income, expenses, and debts.
If you file for Chapter 7, Chapter 11, Chapter 12 or Chapter 13 bankruptcy, you must obtain credit counseling from an agency approved by the U.S. Trustee’s office within the 180-day period before you file for bankruptcy. The United States Trustee Program (USTP) maintains a list of approved agencies on its website.1 The USTP, however, does not endorse or recommend any particular agency on its list, nor does it guarantee the quality of an agency’s pre-bankruptcy counseling or services.2 If you are considering bankruptcy, it is best to contact a bankruptcy attorney prior to obtaining credit counseling to make sure that you are selecting an approved agency and that the time prior to filing is within the required 180-days.
If you are not contemplating bankruptcy but feel you need credit counseling to get your financial affairs back on track, there are a number of warning signs which can help you avoid choosing a credit counseling agency that is more interested in their profits than they are in helping you. You are most likely not dealing with a reputable credit counseling agency:
- If the agency will not provide detailed information about itself, such as the agency’s legal name, when it was founded, what the legal address of the agency is, whether it is for-profit or not-for-profit, what services the agency provides, what qualifications the counselors have and whether they are certified through the National Foundation for Credit Counseling (NFCC), what affiliations the agency has with organizations like the NFCC, etc.
- If the agency wants you to provide personal information like your name, contact information and social security number prior to providing you with any information (see above) to determine whether they are legitimate.
- If you are unable to find any information on the satisfaction of previous customers, such as a Better Business Bureau rating. Check with your state attorney general’s office3 or local consumer protection agency4 to see if any complaints have been filed against the credit counseling agency.
- If the agency doesn’t offer a range of services, giving you options on how to get out of debt. The wider the range of services the agency provides, the more reputable the agency. It is not acceptable for an agency to steer you into a debt management plan or DMP before they have a full understanding of your financial situation.
- If the agency wants to charge you for educational materials or does not provide any educational classes or workshops.
- If the agency will not give you a written quote detailing their account set-up, monthly fees, or any other charges you will incur. According to the NFCC, no fee should be assessed prior to the service being provided, the set-up fee should be $50 or less, the monthly fee should be in the $25 range, and fees should be waived in cases of true hardship.5
- If the agency won’t give you a formal written agreement or contract, but instead wants you to rely on verbal promises. Double check that your contract outlines any verbal promises by reading it carefully prior to signing it.
- If the agency is evasive when answering questions about how the payments you make to them will be used, when payments will be disbursed to creditors, how deposits will be protected and if the agency will work with all creditors, not just a select few of them.
- If the counselors get commissions or bonuses or are in any way rewarded when you sign up for certain services. Ask how the counselors are paid and listen very carefully to the answer. If the answer seems evasive, be wary.
- If the agency can’t answer your questions about privacy, confidentiality and data security.
- If your state requires that the agency be licensed, but the agency is not licensed in your state.
Credit counseling can provide a light at the end of what may seem to be a very dark tunnel of debt. Finding a reputable agency is the best first step to financial freedom. If you are overwhelmed with the thought of just finding the right agency, consider consulting a bankruptcy attorney, who may be able to provide assistance with that process.
Debt solutions begin with taking back control of your finances and an experienced bankruptcy attorney can help you get started. Hines Law is a full-service bankruptcy firm that has been helping the residents of Massachusetts with debt relief through personal bankruptcy for 20 years.
We understand the emotional toll overwhelming debt and filing for bankruptcy can take and we are here to help every step of the way. If you are looking to file for Chapter 7 or Chapter 13 or just need some advice, call and schedule a Free Consultation with one of our bankruptcy attorneys today.
_____________________________________________
1 List of Credit Counseling Agencies Approved Pursuant to 11 U.S. C.-111
Link: https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111
2 Frequently Asked Questions: Credit Counseling
Link: https://www.justice.gov/ust/frequently-asked-questions-faqs-credit-counseling#requirements1
4 State Consumer Protection Offices
Link: https://www.usa.gov/state-consumer
5 Selecting the Right Financial Counseling Organization for You, 10/24/2018
Link: https://www.nfcc.org/resources/blog/selecting-the-right-financial-counseling-organization-for-you/
The post How to Select A Credit Counseling Agency for Your Bankruptcy appeared first on Bankruptcy Lawyers Serving Framingham, MA and Beyond.
No comments:
Post a Comment