Credit counseling companies were originally created by the
banks to collect debts for them. They
offer "debt management plans" where by people can consolidate their
debts and pay them off in full over a period of five years. They try to negotiate lower interest rates
for the credit cards so that they can be paid off over a reasonable period of
time.
Even though they may be able to reduce the interest rates on
some credit cards, the monthly payment under a debt management plan is usually
larger than the combined minimum payments on all of a person's credit
cards. For this reason, debt management
plans are not feasible for most people who are struggling financially. They offer budgeting advice that can
sometimes be useful. However, the advice
is frequently to get a second job (i.e., work yourself to death). It is very difficult to get credit while you
are in a debt management plan. One
couple who paid into a debt management plan came to see Minnesota bankruptcy
attorney Greg Wald after they made payments under the plan for two years. They wanted to buy a house, but the mortgage
company told them they could not have a mortgage because they were still in a
debt management plan. The mortgage
company told them it was too bad they didn't just file a bankruptcy
instead. The FHA will qualify people for
mortgages two years after they complete a bankruptcy case. They realized at that point that they made a
big mistake and eliminated their debt immediately with a Chapter 7 bankruptcy.
Avoid a “BIG” mistake!
Contact Minnesota bankruptcy attorney Gregory Wald at (952) 921-5802 or
visit them on the web at bankruptcyminn.com.
Discover the difference between “debt management plans” and filing
bankruptcy before it’s too late.
