When you are struggling to pay your bills and are considering bankruptcy, part of the law requires you to take a debtor education course 180 days before submitting your paperwork with the court. You can find a list of approved counselors on the United States Department of Justice website.
Be wary of debt counseling and offers to fix your credit from for-profit agencies. If a deal seems too good to be true, it often is. Some of the less reputable agencies will attempt to rip you off and take advantage of your vulnerable financial situation. Ways to get your money and make your situation worse is to offer high-interest consolidation loans or offer to clear up your credit report.
Debt Repayment Plans
Debt repayment plans may sound like a good idea to keep you out of bankruptcy, but these plans often fail and leave you in a worse position than before you started making payments. For-profit agencies generally get commissions from the credit card companies for every payment plan they can sign a customer up for. The payments you make could also include a fee to the counselor for taking care of the paperwork.
- Sometimes your creditor gets tired of waiting for the payment from these agencies and goes ahead and takes you to court to get some of the money owed.
- You could be making payments to the agency for several months or years.
- When you fall behind in these payments, the whole system stops, and you will still owe on your debt.
These agencies often discourage filing bankruptcy. They know that the debt you owe to the credit card companies will be eliminated if you file bankruptcy. And they will not get a commission or fees to handle your money and debt.
When you file Chapter 7, you will not make any payments to the court, and your qualifying debt could be eliminated in as little as three to six months. If you have significant secured assets, such as a mortgage, you would like to keep filing Chapter 13 to protect your property and give you three to five years to catch up on the payments.
If you are considering bankruptcy, contact a Dallas bankruptcy attorney to get recommended debt management courses and how to get financial relief.