Credit Counseling after Bankruptcy

Post-bankruptcy credit counseling is a mandatory process that all filers must go through. However, consumers should be happy to know that the process is usually hassle-free and can be genuinely helpful in rebuilding credit after bankruptcy.

What is Credit Counseling?

Credit counseling is a program where financial professionals help guide consumers in financial crisis out of debt. In addition to this tutoring, counselors often work with debt collection agencies to lower minimum payments and produce a feasible payment schedule specific to each consumer’s situation. These plans are typically pre-arranged by the financial institution and are governed by each company’s predefined debt management guidelines. Counselors may also have the ability to lower interest rates and completely eliminate late fees.

How Credit Counseling after Bankruptcy Works

As with pre-bankruptcy counseling, debt counseling can be completed in person, via phone, or online. These sessions typically last for up to two hours, and cover a wide range of financial instruction. The topics covered by counselors include managing money, budgeting, and using credit wisely. Costs for debtor education generally range from $20-$100. However, a waiver can be obtained to void the counseling fees prior to completing the session. Consumers receive a certificate upon completion.

Find a Counseling Agency

Some lawyers , especially attorneys for bankruptcy, are able to provide a reference for credit counseling. However, lawyer-provided counselors may not always come with the best rates. Additionally, these attorney-appointed counselors can sometimes hold short sessions that provide little insight into relief. Consumers are urged to seek out counseling from organizations such as the Association for Independent Consumer Credit Counseling Agencies (AICCCA). Local credit counseling providers are also available in most residential locations. More information on available agencies can be found through Google Places or through local bank branches.

What to Look for in an Agency

Some counseling agencies should be avoided completely. Consumers should seek out professional services that are certified under the United States Trustee’s Program, run by the Department of Justice. Non-verified agencies will not be able to fulfill the post-bankruptcy counseling requirements. Additionally, consumers should steer clear of agencies that offer services for rates higher than $100. Most counseling agencies stay within an affordable range to provide relief to those in financial crisis. Also remember to check with the Better Business Bureau where it is actually possible to search for accredited counseling services. Requirements for providers can be obtained by talking to a lawyer or a financial planner at a bank.

Be Prepared to Do Research

Post-bankruptcy credit counseling only lasts for one session. While counselors will provide some insight into where the largest amounts of debt are coming from, consumers should be prepared to find independent educational materials to learn more about raising a credit score and remaining debt free. There is a multitude of free information available online for understanding how credit scores work and which steps to take to raise a score. Additionally, personal finance books and debt management guides are available at local bookstores.

Credit counselors are there to help you, and are some of the nicest people you could ever speak with. Try not to be anxious about your upcoming counseling service, just remember to relax and be totally honest.

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