Bankruptcy Alternatives / Debtor's Options

Non-Profit Credit Counseling Services FAQ

  1. Non-profit credit or debt counseling agencies charge no fees, and I don't have extra money, shouldn't I always start by trying the non-profit credit or debt-counseling route?
  1. Some of these non-profit credit or debt counseling agencies can be great. In certain cases a prescription of non-profit credit or debt counseling can be just what the doctor ordered, but be very careful.
  1. Do these agencies have a dark side?
  1. Absolutely! I have seen many people fighting to avoid foreclosure because they put their faith in the wrong non-profit credit or debt-counseling agency.
  1. How can I find the right agency?
  1. The best practice in dealing with these agencies is to understand who they are, what they do, and only seek them out if your situation truly fits their program after some good independent debt advice.
  1. I thought these agencies operated though the state or federal government as a free service to help debtors, is that wrong?
  1. Very wrong! The way these agencies earn non-profit status is by filing the property tax papers, not because they are federally sanctioned or endorsed. This non-profit status does not prevent them from making a lot of money and paying the owners and directors huge salaries so when the end of the year tax audit comes there is "no profit".
  1. Doesn't the government fund the non-profit agencies and insist on a neutral bias and that they help the debtors?
  1. Just the opposite. Almont all of the funding for these "non-profit" agencies comes from the CREDITORS, meaning if you want to be funded next year they better have a creditor bias.
  1. If they have an allegiance to the creditors what will they do for me as the debtor?
  1. Basically these agencies will arrange a payment schedule with your creditors.
  1. How does that benefit me as the debtor?

    1. The creditors will stop hounding you.

    2. You will most likely make just one payment to the agency, they will break up the funds, making things easier

    3. Sometimes they will negotiate interest lowered or eliminated.

    4. Minimum payments can be lowered to make things affordable and stretch your repayment time frame.

    5. Chater 7 bankruptcy or chapter 13 bankruptcy can be avoided.

    6. They will negotiate with the creditors for you, avoiding the sometimes nasty or confrontational collectors.

    7. If you complete all program payments your credit card debt will be gone.

  1. That sounds like just what I need. Why shouldn't I do that?
  1. I'm not saying you shouldn't, I'm saying you should understand all of the options and the downside of debt or credit counseling services.
  1. What are the negative aspects of debt or credit counseling services?
  1. Here are the three big ones:

1. Too often these payment plans demand so much of the debtor failure remains only a matter of time. Even worse than that a debtor may enter into a credit or debt counseling to work with credit card and personal debt, and in an effort to keep up with a futile plan put their home mortgage in default. Some of these agencies have an attitude that if your plan crashes after three months that was three months of payments the creditors wouldn't have had.

2. Other options will settle the debt for zero dollars or at a discount. Non-profit credit or debt counseling agencies always work out the debt at 100 cents on the dollar, that's why I have listed this option as a sub-category of payment in full.

3. Some mortgage lenders will view enrollment in a debt-counseling program as an event equal to a bankruptcy in terms of a negative impact on your credit score.

  1. I thought credit counseling would help my credit?
  1. It may, and in the long run it certainly will. In the short run, however, some lenders may treat you like an outcast. Certain lenders view credit counseling as a good thing. Not as good as unflawed credit, but not as a terrible flaw. Credit counseling should not stop you from getting credit; it will just eliminate some choices.
  1. Do non-profit credit counseling agencies offer any special advantages?
  1. Yes.
    1. They try more than others to examine the root of the debt problems and help with budgeting and future fiscal planning.
    2. Other than paying what a creditor asks for in full, credit counseling can be the least damaging debt option to in terms of putting your self in a position to rebuild your credit and improve your credit report.
    3. For debtors with high incomes or who still have very good credit non-profit credit counseling services may be the only option available.
  1. How can I learn more about if non-profit credit counseling is right for me?
  1. I have prepared a free interactive debt analysis tool which may help.


Bankruptcy Alternatives / Debtor's Options - Home Page

Lifestyle | Real Property and Other Hard Assets | Foreclosure | Cash, Stocks, IRAs and Other Soft Assets | Secured vs. Unsecured Creditors | Credit Rating
Debt Workout Mortgages & Secured Debt | Credit Card & Unsecured Debt | Bankruptcy | Do Nothing | Deed in Lieu of Foreclosure | Do Nothing Home Forclosure | Pay Creditors in Full | Debt Consolidation Loan | Non-Profit Credit Counseling | Credit Card Balance Transfer

Debt Consolidation / Debt Settlement Program - Consolidate your credit card and unsecured personal debt with a program to settle balances for 30-50 cents on the dollar. Make monthly payments toward the total settlement over a period of years. Free initial consultation. Learn more and see if your situation fits the program online.

A Guide to Borrowing Money with Bad Credit - Including informational articles on obtaining a home mortgage, auto loan, credit card or unsecured personal loan.

Credit Cards For People With Bad Credit - Read either informational articles on obtaining any type of bank card or credit card with bad credit, including a definition of what is bad credit or look at a complete set of FAQs dealing secured credit cards.

Credit Repair and Credit Rebuilding -Credit repair and credit rebuilding article. Topics include how to repair your credit and warnings about credit repair scams. Links to other credit repair sites and professional credit repair services plus my own Free Guide to Help Repair and Rebuild your Credit Report. For more credit help try 14 Do's and Don'ts To Raise A Score Fast or the Credit Score FAQ.

Who to pay when you can't pay everyone - An article addressing cash allocation for debtors.

How to Get money when you need money - Examines WHEN you really NEED money and how to get money even with bad credit for an emegency or financial crisis.

Stop Home Foreclosure Help - Articles to better understand the foreclsoure process and how to avoid a foreclosure including an interactive tool to analyze your own situation and point you in the right direction to keep your home, a list of various ways to halt a foreclosure, a list of 10 mistakes to avoid when facing foreclosure and foreclosure myths.

Personal Home Budget Analysis - An interactive tool to learn where your money REALLY goes. Input your income and expenses, the program will automatically determine if you have accounted for all you have spent. When you have discovered all your expenses you will be know the details of any overspending. Use this information to help plan and keep a monthly budget or change spending to avoid further debt or bankruptcy.

For information on contacting Mory Brenner, Esq. please visit the contact page.

Nothing contained herein should be construed to constitute advice for your personal circumstances. This is intended as a peripheral exposure to the various options available, but by no means is this a comprehensive or exhaustive analysis of the bankruptcy laws or their alternatives. Whether or not you should file a Chapter 7 bankruptcy, Chapter 13 bankruptcy, or any bankruptcy, will vary depending on your personal circumstances and should only be undertaken after careful consideration, analysis and after consultation with an attorney experienced with such matters. These pages may contain information and rules peculiar to the Commonwealth of Massachusetts.

This material may be considered advertising under the rules of the Supreme Judicial Court of Massachusetts.

Web site design by Mory Brenner. This page, and all contents, are Copyright (C) 2010 by

Financial Firebird Corporation, 150 North Street Suite 40, Pittsfield, Massachusetts 01201.

The most recent update of this page occured on 04/07/10.