Credit counseling is one of the ways in which many individuals try to resolve their debt. It involves the settling of debt with creditors so that the debt can be repaid within a specific amount of time. At the same time, interest may be eliminated and stop accruing during the agreement period.
To make the payment manageable, one lump sum payment can be paid to your Minneapolis bankruptcy attorney so it will be distributed to all of the creditors in the agreed upon amounts. This makes debt a lot easier to manage and should not be confused with debt consolidation, which is a loan used to pay off debts.
There are a number of benefits to using credit counseling as a way to conquer your debt. They are:
- Payment reduction
- Eliminated or reduced interest rates
- Elimination of over-limit and late fees
- Creditors can mark the accounts as current, which is known as “re-aging.”
- Collection calls stop
When utilizing the credit counseling services of a bankruptcy attorney, you also learn how you can better manage your debt. This is so you don’t find yourself in the same situation again. Overall, it is a very educational process where you learn how to cut spending in some areas so you can live more comfortably and pay your debts.
The one downfall comes with missing a payment. If a payment is missed, the creditors consider that a breach of the agreement. This means that everything goes back to the way it was before the agreement was put in place.
Even if you decide to file bankruptcy, you will need to complete a credit counseling course before your petition can be filed. This course can be conducted over the telephone, online, or in-person with an authorized credit counseling firm. The purpose of the course is to make sure bankruptcy is the right option for you. It may be possible for you to use credit counseling as a solution before bankruptcy. If it is determined that you are a good candidate for bankruptcy, then a certificate is included with your bankruptcy petition that says you completed the course and bankruptcy is best for you.
If you are facing debt and you don’t want to file bankruptcy, credit counseling may be the solution you are looking for. If it is found that credit counseling may not solve your debt issue, then bankruptcy may be the alternative. Paul Ross & Associates can help you determine the best course of action for you. Call for your free consultation at 952-448-3333.