Anyone who wants to file for Chapter 7 or Chapter 13 bankruptcy has to first be judged eligible. One of the things required in order to be eligible is that you first attend a credit counseling program. A number of critics think that this government requirement is simply a way to reward credit counseling companies with more profits by mandating that consumers attend their courses.
At one time, the filer was required to seek help from a non profit agency. With the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, however, for fee agencies were allowed into the mix. Whichever one you choose, if you want to file for bankruptcy, you are going to have to take a credit counseling class.
The purpose of having to attend one of these classes is to give you an opportunity to determine if bankruptcy is the best option for you. The assumption is that since you are having difficulties with your finances, you probably don't have a good handle on the best ways to manage money. Taking the course may give you other, less drastic, options of dealing with your financial problems than filing for bankruptcy. If so, everyone comes out ahead - you, your creditors, and the bankruptcy court system.
Those who criticize the system, however, feel just a bit different about how the current system works. A main reason given is that no distinct standard exists that defines the type of training the various counselors be proficient in. Not only that, but the types of locations that the training is held in vary according to where you live in the country. For example, some will require in office consultations. Others only offer telephone consultations. And still others, offer only Internet access. In addition to this, the fee structure is all over the map. The only guideline that the government gives is that the charge be reasonable - with the company able to charge whatever they think the market will bear.
Others believe, however, that in most cases there is not any actual real counseling taking place. The company merely gives you some boilerplate materials and call it a day, with the consumer being none the wiser for the money he has just spent.
But, as mentioned above, you don't really have much of a choice. If you want to avoid becoming frustrated, it is best to consider the money you pay for the course as simply another filing fee that you have to pay in order to file for your bankruptcy. And, if you manage to get some worthwhile financial information out of your counseling session, fine. Otherwise, recognize it as just an extra nuisance fee that you have to abide by.
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