In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was passed and announced to the public. This act requires consumers first take credit counseling before filing for bankruptcy.
A consumer credit counseling agency aims to help those people who have debt problems with their repayment obligations and teach them how to manage their finances more effectively. Many people have trouble with proper budgeting and usually their filing for bankruptcy is a result of uncontrolled spending. Although there are cases where uncontrolled events such as divorce, sickness, or loss of job is the main reason for bankruptcy, ineffective financial management cannot be denied as one reason that contributed to this sad situation.
Credit counselors should primarily look after their client’s financial improvement. However, the reality is not all credit counseling agencies live up to this obligation. With the emergence of thousands of different credit counseling companies, a huge portion of these are only after their own benefit. In fact, even so-called non-profit organizations may be after their profit after all. Thus, it is important to be wise in choosing your credit counselor.
How to Choose the Right Counselor
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