Should a debtor seek consumer credit counseling before they file for bankruptcy?
At the present time, there is no requirement that a debtor must enroll in a consumer credit counseling program before he files for bankruptcy. In certain situations, consumer credit counseling may be a good alternative to avoid bankruptcy. However, any person must be advised of the following factors. First, when a person goes to a credit counselor he will be asked to provide detailed income and asset data, living expenses, household information, lists of creditors and other debt information. Some counselors may ask you to sign an agreement and may even charge a fee. A repayment plan is then developed which may include reduced payments to creditors. Keep in mind, however, that most creditors do not stop charging interest (unless you have a prior agreement respecting that) and may even report negative information on your credit report. This is notwithstanding the fact that you may be current in you payment plan. Creditors may also, and most likely will, cancel your charge privileges.
