Credit Repair by J.D. Robin Leonard & Attorney Margaret Reiter (Nolo)

Author:J.D. Robin Leonard & Attorney Margaret Reiter (Nolo) [Robin Leonard, J.D.]
Language: eng
Format: epub
Published: 2011-05-10T20:11:02+00:00

Chapter 13 Bankruptcy

Participating in a credit or debt counsel ing agency’s debt management

program is a little bit like filing for chapter 13 bank ruptcy. (See

chapter 7 for information on bankruptcy.) it’s important to consider the

comparative advantages and disadvantages of debt repayment plans and

bankruptcy.

Working with a credit or debt counseling agency has one major

advantage: no bankruptcy will appear on your credit record.

But a debt management program also has two disadvantages when

compared to chapter 13 bankruptcy. First, if you miss a pay ment,

chapter 13 protects you from creditors who could otherwise start collection actions. a debt management program has no such protection—any creditor can pull the plug on your plan. also, a debt management plan

usually requires that your debts be paid in full (less interest or fees

that are reduced or waived). in chapter 13 bankruptcy, the amount

you have to pay depends on your disposable income and the value of

your nonexempt property; you may end up paying back only a small

percentage of your unsecured debt, and may even be able to pay less on

some secured debts.

204 | CREDIT REPAIR

Choosing a Good Credit

Counseling Organization

Despite the warnings above about unscrupulous debt relief services,

there are some legitimate credit counseling agencies that can help. These

agencies generally offer a variety of services, including free financial,

budgeting, and credit education, as well as educational materials you can

use yourself. Some may offer housing counseling, including for first time

homebuyers and on subjects such as reverse mortgages and foreclosure

avoidance. They can also help to set up a debt repayment plan (also

called a debt management plan) to reduce your debts and repay the

reduced amount to your creditors.

creditors are often more than happy to work with respected organizations that help debtors who are serious about repaying their debts.

reputable nonprofit credit and debt counseling agencies often work

through the United Way, or a church or synagogue.

The trick is finding a good, legitimate credit counseling agency

among the forest of ads for not-so-legitimate companies. Many of the

unscrupulous companies claim to be nonprofits when they are not;

charge high up-front and continuing fees or “contributions,” even higher

than allowed by many states’ laws; provide little or no credit education,

counseling, or other services, besides debt management programs;

and deal only with unsecured debts, which means you may end up

misdirecting limited funds away from your top priority debts.

The single most important way to protect yourself when seeking help

from a debt services company is to use a reputable nonprofit company.

Unfortunately, it’s not easy to determine which companies are reputable

and which are not.

ChApter 10 | GETTING HELP TO NEGOTIATE AND MANAGE DEBTS | 205

Consumer Credit Counseling Service and

Agencies Approved by the U.S. trustee

if you’re looking for debt management help or credit counseling services,

your best bet is to use either an agency affiliated with the consumer

credit counseling Service (cccS) or one of the agencies approved by

the U.S. Trustee.

Consumer Credit Counseling Service (CCCS)

consumer credit counseling Service (cccS) is the oldest credit

or debt counseling agency in the country. actually, cccS isn’t one

agency. cccS is the primary operating name of many credit and debt

counseling agencies affiliated with the national Foundation for credit

counseling (nFcc).

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