Consumer Credit Counseling | Bankruptcy Information

Bankruptcy Counseling Program

August 3, 2010 By admin 10 Comments

How Do Lenders View Credit Counseling Services?

Typically consumers that have overwhelming debt have two options, either enter into a Consumer Credit Counseling Program or declare Bankruptcy. While the two options may have a lot of similarities, most will opt to enrolling into a Consumer Credit Counseling program for such reasons as it is more cost effective and easier to implement.

Many credit card companies and creditors realize that it would be more beneficial to actually work with debtors and make affordable payment arrangements than to pursue typical collection activities. Instead they work with each of the individual's creditors to come to some agreement that will result into a reduced single payment plan, a consolidation of their debt, and or a reduction of interest rates and late fees - thus making it possible for the debtor to repay his or her debts over a period of 3 - 5 years. Once enrolled, the debtor will make a single payment to the consumer credit counseling service, and then the counseling service will make all the payments to the creditors.

One of the advantages of credit counseling services is to educate their client about debt management and budgeting.

The main disadvantage of enrolling into consumer credit counseling services is that many creditors will make a notation on the debtor's credit report indicating that the debt is being managed by consumer credit counseling agency.

Another major issue that a client may experience is, even though they are making their monthly payments to the credit counseling service on time, the credit counseling service doesn’t make the payments to the creditors on time. Now this will reflect on the client’s credit report as late payments.

And to add fuel to the fire, it is not uncommon for the credit counseling service to make the payments on time, while the creditors are not accepting the reduced payment amounts. This, too, would negatively affect the consumer's credit report.

However, if you are in the market to purchase a home or refinance, it is important to find a mortgage expert that specializes in helping individuals that have been enrolled or that are currently enrolled in consumer credit counseling services. The lender will request from the credit counseling agency a copy of the agreement which will indicating the date the consumer entered into the program, all the creditors involved, and the payment history of the consumer's payments. From this information, the lender will then determine if the client qualifies for a mortgage loan. FHA LENDER’S understand that if the consumer has been making their payments on time to the consumer credit counseling agency, but the creditors have been getting their payments late, then that's not the fault of the consumer and shouldn't penalize them from purchasing a home or refinancing their home.

It is important to note that many lenders view credit counseling services as similar to a Chapter 13 bankruptcy, because both can entail a payment plan and re-negotiation of debt payments. (And, in fact, some people who are using a credit counseling service do end up filing bankruptcy because they still don't have the income or money management skills to handle the payments.) So, in some cases use of such a service can be a negative.

However, many FHA Lenders recognize that if a person is attempting to handle debt responsibly by enrolling in these types of services, then that person probably takes their financial commitments seriously. In general, in order to get a mortgage the borrower must have a 12-month history of paying on time and a letter from the counseling service stating that purchasing a home or refinancing will not interfere with the repayment plan. Thanks to FHA Loans, consumer credit counseling services will not restrict the borrower from obtaining a low interest rate mortgage loan.

Article Source: http://www.articlesbase.com/mortgage-articles/how-do-lenders-view-credit-counseling-services-664130.html

About the Author

Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in FHA Mortgage Loans for people with Consumer Credit Counseling, Bankruptcies, Foreclosure or with other credit issues. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit http://www.specializedfinancialsolutions.com/own-a-home.htm or Call 954-678-5796

Consumer Bankruptcy Counseling Project

August 3, 2010 By admin Leave a Comment

How Will Consumer Credit Counseling Services Eliminate My Debt?

Author: Abby Reid

Participating in a debt management plan can initially seem uncomfortable, new or intimidating. Even though trained credit counselors help financially-troubled families and individuals avoid bankruptcy, changing your attitude toward money can be somewhat scary. If you’ve taken a step toward financial freedom by enrolling in a bankruptcy education course, you may be curious as to how your current financial situation will change. Many people who enlist the aid of a consumer credit counseling service may wonder, what happens next?

Be patient. Accept that changes to your financial situation may come slowly. You didn’t get into debt overnight. It probably took many months or years to dig yourself into an economic ditch. It may take even longer to reach financial stability. Don’t become discouraged or upset if your progress is not immediately apparent. Significant change takes time. Celebrate small accomplishments during your debt repayment plan. Remember that your goal is to avoid digging yourself into further debt – even if it is a slow process.

Research bankruptcy and debt management. You’ve already taken a step in the right direction – you’ve obtained the financial help of a free consumer credit counseling service. Make sure that you listen to your counselor and closely follow the debt management plan and economic advice that he or she provides. Most counselors have helped an endless number of people who are facing the same financial difficulties as you. Sign up for e-mail newsletters that offer money-saving and budgeting advice. Check out a book at the library on how to create a budget and increase your assets. Look into free online debt management and bankruptcy courses. You will learn invaluable information that can help you make the most of your consumer credit counseling services.

Look for ways to increase your income outside of your regular job. If you feel that you’ve earned it, ask your boss for a raise. Get a second job. Sell items online. There are many different ways to make money. Increasing your take-home pay can help you get out of debt much faster. You do not have to work extra hours permanently, just until you are able to put some money toward your debt management plan.

Reduce your spending. Many consumer credit counseling services suggest that you try to temporarily live below your means. It will make a considerable difference in your overall debt management plan. Learning to live on less money can also help you develop sensible spending habits that will help you avoid bankruptcy in the future.

Change your lifestyle. Become an expert at saving money and being frugal. Rent videos and books from the library. Dine out at restaurants less often. Shop at thrift stores or discount retail chains. Buy foods in bulk. Don’t purchase anything that isn’t necessary. It may not be fun, but it will help you put more money toward your debt management plan.

Article Source: http://www.articlesbase.com/credit-articles/how-will-consumer-credit-counseling-services-eliminate-my-debt-642380.html

About the Author

Advantage CCCS is a free consumer online credit counseling service that helps families and individuals avoid bankruptcy and develop a debt management plan.

Filed Under: Bankruptcy information Tagged With: bankruptcy counseling, Cccs, Consumer Credit Counseling, Consumer Credit Counseling Service, Credit Counseling, Debt Management Program, Debt Monkey

Bankruptcy Credit Counseling Agency

July 24, 2010 By admin 10 Comments

Credit Counseling and New Bankruptcy Laws

Author: Simon Volkov

Credit counseling is a viable alternative for people considering bankruptcy or under pressure to make ends meet. Consumer credit counseling is an exceptional choice for young adults venturing away from home or newly married couples wanting to start off on the right financial foot.

Credit counseling services are available in most metropolitan cities. Most agencies charge fees for consultations and services. Individuals unable to afford counseling can seek help through non-profit agencies offering no- or low-cost services.

Although the economy has improved, many people are facing serious financial challenges. Many are turning to personal bankruptcy to stop creditor harassment or avoid foreclosure. Personal bankruptcy should be the last resort whenever possible. In addition to being reflected in credit scores, bankruptcy can prevent borrowers from obtaining credit for years to come.

In 2005, Congress enacted new bankruptcy laws which permanently altered the way consumers could obtain protection from creditors. The Bankruptcy Abuse Prevention and Consumer Protection Act require debtors to undergo credit counseling through an U.S. Trustee approved agency before bankruptcy approval is granted.

The U.S. Trustee Program is governed by the Department of Justice. Credit counseling services must abide by federal law and provide services to those who qualify. Personal money management experts suggest using an approved credit counseling agency prior to submitting a bankruptcy petition. Counseling could allow debtors to avoid bankruptcy. If not, BAPCPA credit counseling requirements will be met.

Individuals who obtain consumer credit counseling from providers outside the trustee program should take time to investigate the agency prior to signing a contract. One trustworthy source for verifying business credentials is the Better Business Bureau. The BBB provides basic business information and can verify if the company is in good standing or if complaints have been filed.

Another trustworthy source for credit information is MyMoney.gov. Founded by the U.S. Financial Literacy and Education Commission, this program provides a complimentary "My Money" toolkit consisting of pamphlets and a vast assortment of personal money management information and resources.

A lesser used, but highly reliable source for solid credit information is public libraries. In addition to books, libraries often loan an assortment of home study courses on household budgeting, debt consolidation, eliminating credit card debt and building investment portfolios.

Conquering debt and gaining control of finances is empowering. Education is the key to breaking through credit challenges. Take time to learn about personal money management strategies. Listen to Dave Ramsey or Suze Orman or borrow their books or videos from the library. Within hours you can discover how to pay off credit cards, eliminate outstanding debts, develop an investment portfolio, and become an expert in finances!

Article Source: http://www.articlesbase.com/personal-finance-articles/credit-counseling-and-new-bankruptcy-laws-1631451.html

About the Author

Simon Volkov is a real estate investor who specializes in helping people facing financial hardships. His website offers a vast article library focused on credit counseling, bankruptcy, debt reduction and personal money management. Discover a world of financial options and resources at www.SimonVolkov.com.

Filed Under: Bankruptcy information Tagged With: bankruptcy, Consumer Credit Counseling, Credit Counseling, credit counseling services, credit score, dave ramsey, Debt Consolidation, non profit credit counseling, suze orman

Bankruptcy Florida Homestead Exemption

July 9, 2010 By admin Leave a Comment

Why Is Counseling Required To For Bankruptcy?

Author: Ameen Kamadia

As a result of filing bankruptcy, many consumers are required to attend credit counseling. The best method of pursuing this is to do it under Chapter 13 of the United States Bankruptcy Code. You are able to set the plan approved by the Court and then make your payments to the Federal Court Order that will stop the interest, late fees and collection calls. It is in your best interest to use the leverage of the Federal Court and avoid being taken advantage of by fraudulent credit counseling services.

You must be savvy in choosing the appropriate debt counseling service. Many companies will only wait until the bills go to collection and into default before they begin making the payments on your debt. This often destroys a consumers credit rating. You should also be savvy in choosing the appropriate debt consolidation loan.

Loans will consolidate all of your debt, but you must be sure that you will be able to repay the entire loan amount. You must understand the term and the interest rate on the loan. Some loans may require a balloon payment at the end of the loan. This is something that you should be aware of, as many lenders will entice you to take out another loan to pay the balloon payment.

Be wary of home equity loans if you are already having difficulty making ends meet. If you are unable to pay the home equity loan back, your home may be foreclosed upon to pay the debt. Due to the Texas Homestead Act, your home is safe from unsecured debts that are not exempted by the Homestead Act. Most states have an exemption that protects a certain amount of your home equity, but if you choose to pledge that amount to the loan then the Homestead exemption will no longer protect your home.

Be certain that you fully understand the program or service that you are participating in. Some services will negotiate with your creditors or make payments on the debt for you after you make a payment to them. You should understand whether the service promises to lower the amount that you owe or the interest rate that you pay. Others will promise to lower your monthly payments without changing your situation. They may also charge fees for handling your debt for you.

Some debt counselors will also only work with unsecured commercial creditors and will not help you with child support or unpaid taxes. They will actually ignore the debts that will not go away will send you money to those claims that could be discharged in bankruptcy.

There are several debt management services that are offered at a modest cost. It is often best to look for these non-profit services. For-profit or fee-based services should be approached cautiously and you will want to ensure that the service is worth what it costs.

By not choosing an appropriate service, you may find yourself in deeper debt and your credit rating may be very low at the end of the process.

Article Source: http://www.articlesbase.com/non-fiction-articles/why-is-counseling-required-to-for-bankruptcy-233081.html

About the Author

Ameen Kamadia aims to help Texas homeowners face the difficulties of foreclosure.
That's why he has created an informational site that lists all the options homeowners
have. Get an unbiased, educated opinion about How
To Stop Foreclosure at http://www.foreclosure-stoppers.net

Filed Under: Bankruptcy information Tagged With: bankruptcy counseling, Consumer Credit Counseling