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Bankruptcy Credit Counseling


When you're on the verge of bankruptcy, credit counseling, if done right, can sometimes effect a real change in your financial condition.

Many skeptics believe that bankruptcy credit counseling is simply a tool used by the financial industry as a way to get more money out of the consumer. The fact that many credit counseling agencies are funded by some of the major banks probably helps to create that impression. Nevertheless, the right types of credit counseling companies can help someone who is struggling financially. Ideally, the goal of a good bankruptcy credit counseling is to help their client get back on the road to financial stability through the best means possible.

Bankruptcy credit counseling involves analyzing your debts, expenses, income, and assets and determining if bankruptcy or some other type of debt resolution would be best for your situation. A counseling session will also point out the advantages and disadvantages of filing for bankruptcy - if the client should decide to go that route. And to recommend a chapter 11 bankruptcy lawyer, if necessary.

After getting a handle on all the financial data, the counselor will put together a draft budget and go over it with the client. It may turn out that bankruptcy is not the best option in which case the counselor will recommend another course of action.

For example, the budget may indicate that the client is spending $500 a month on entertainment activities such as concerts, ball games, card games, etc. Together, the counselor and client may make the determination that the amount could be dropped to maybe $200 a month with only a minor change in lifestyle. The same things can be done with the food budget, travel budget, clothes budget, and so on. In the end, it could be determined that the only thing needed to get back on track is reallocating the income, decreasing expenses, or a combination of the two.

Bankruptcy credit counseling is a big business with lots of money at stake. As a result, most of the credit counseling services that you encounter will be fee based. However, there are many non-profit, community run counseling offices as well. These may be free or may only charge a small fee to handle their expenses.

Another good source of bankruptcy credit counseling are credit unions. If you belong to one of these they can often offer constructive plans for getting out of your debt predicament.

Although, with today's technology, a bankruptcy credit counseling session can be done over a phone or even interactively over a computer, with something as life changing as bankruptcy, you should probably insist on a face to face session.

No matter what type of plan you sign up for, it will undoubtedly take some time to get your financial situation back on track. Any company promising to fix your credit problems overnight, should probably be avoided.

Wage Garnishment
Wage garnishment is the process by which a creditor attempts to collect what you owe him by taking the money directly from your paycheck before you can get a hold of it.

Bank Account Garnishment
When a creditor is having trouble collecting debts from you he may take his grievance to the courts and ask them for a bank account garnishment.

Garnishment Laws
Garnishment laws vary by state. What is common among all states, however, is that before garnishment can proceed, it must be approved by the courts.

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