Times are tough on everyone right now. You are a good person in a bad situation, and you probably feel alone and worried about your near-desperate circumstances. However, if you have been considering working through a "credit counselor", explore working through an attorney instead.
You hire the attorney to work on YOUR BEHALF. And you can be sure the attorney will work within the law.
Bankruptcy is a federal law written specifically to PROTECT YOU from creditors. The law is racked with extensive code detailing its parameters and is heavily regulated to ensure that mistakes and violations are prevented.
While there may be credit counselors who have honorable intentions, the fact remains that the industry is not as well regulated as bankruptcy. The counselors sometimes actually work for the creditors. They typically have no legal OR financial background, and yet they have a huge responsibility for your financial future.
Of course you want to "take responsibility" of your debts and pay what you rightfully owe. That is noble and often the ethical choice.
If you file bankruptcy, you are not absolving yourself of the responsibilities you have to your creditors. You are simply protecting your assets and your family. Your relatively minor set back should not cost you the home you have been living in ten years. Losing your job should not mean that you lose your transportation to your next job.
A qualified attorney will help you determine what you can afford given your current financial circumstances and help you restructure you debts in a way that protects you from further harassment by your creditors.
You will not get this same protection from a credit counselor.
In the March 27, 2009 edition of NPR's Marketplace, Sally Herships reported on a woman who wanted to buy a home but needed her credit repaired. In August a man referred to her by her real estate agent said he could have her FICO score up 200 points by December.
Herships said, "You know where this is going right? December rolls around and Beverly's credit report: untouched. And the guy she paid 1,400 bucks to up front, isn't returning her calls. She's been scammed. The Federal Trade Commission says complaints about credit repair scams went up 50 percent last year. Tom Bartholomy is president of the Better Business Bureau in Charlotte. He says asking for money in advance of service is one way to recognize a scam -- it's illegal."
Unfortunately this story is typical. And unfortunately, the people who pay credit counselors often end up in bankruptcy court in worse shape than they would have been in had they sought counsel in the first place.
Contacting an attorney and completing an evaluation is a great first step toward reclaiming your financial future. It's certainly a safer step.