| · Credit counseling - Non-profit does not always mean safe. Nearly every ad your see, hear or read are "non-profit organizations." Indeed they may be, however, most of these firms are funded in part by the very credit card companies and banks you're indebted to. If, and only if you meet your creditor's requirements, the "counselor" will get you a lower interest rate in most cases, but you will have to pay back the entire balance you owe. If you miss a payment, you may get removed from their program. These companies require that you set up a reduced and strict payment plan with your credit card company, while they collect a large up-front fee from you and a monthly maintenance fee, all while collecting a fee from your credit card company. You might as well file for bankruptcy because credit counseling will be reported as bad credit. 75% of all people in credit counseling do not successfully complete the program. · Bankruptcy - Recent reforms in US bankruptcy laws have made it more difficult for consumers to declare bankruptcy. In April 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) decreasing eligibility for people to file Chapter 7 bankruptcy, the most popular form of bankruptcy. Just like many other debt relief programs, you have to qualify for bankruptcy. If you do qualify, bankruptcy requires that you appear in court and will be a matter of public record. Bankruptcy will ruin your credit and stay on your credit report for up to 10 years. This should be a last resort option. |
