Should I try a Debt Counseling Service instead of filing bankruptcy? How do Debt Counseling services work?
“Debt Counseling Services” are often high-interest loan companies. Other times, they are agencies that pocket 10-50% of the monthly money that you pay to them as fees for their “counseling”. Most of these services will combine your bills and send a partial payment to each bill that you owe. Your credit will be listed by the credit card companies as delinquent for sending in partial payments, and the reduced amounts sent in may not even cover the interest that a debt charges. These “Counseling Services” are often simply rip-offs that pretend to be charities or helping agencies. If you pay a debt counseling service $100 a month, what happens is that they take up to $40 for themselves and then send your Creditors $60. Your bills fall even farther behind. Eventually, Creditors file lawsuits and you are forced into bankruptcy anyway. Very few of these “repayment plans” work and over 90% fail, leaving you worse off. Another scam is that some debt counseling companies will charge thousands of
Related Questions
- I have finished debt counseling now I am hearing reports that I was probably better off filing for bankruptcy. Any advice?
- Who offers free debt counseling that qualifies as a precursor to filing Chapter 7 bankruptcy in California?
- Should I try a Debt Counseling Service instead of filing bankruptcy? How do Debt Counseling services work?
