Bad Credit Online Magazine - Daily News and Advice on Credit, Debt and Mortgage : Debt consolidation or credit-counseling will be required before filing bankruptcy

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July 24, 2005

Debt consolidation or credit-counseling will be required before filing bankruptcy

In just three months new bankruptcy law will go into full gear. Among other things this law requires consumers that want to declare bankruptcy to consult with nonprofit credit counseling agencies.

According to Seattle Times there are several issues with this requirement.

One big issue is allegations of fraud in the credit counseling industry. Over the recent years there have been several cases when credit counseling companies had to pay huge fines for ripping consumers off.

Another is worry about Internal Revenue Service. IRS has been watching credit counseling companies that claim non for profit status very closely.

One of the largest outfits, AmeriDebt was shut down after the FTC accused it of claiming to be a nonprofit and taking $170 million in hidden fees.

Three others - National Consumer Council, Debt Management Foundation Services and Better Budget Financial Services — went out of business.

Posted in Credit Counseling at July 24, 2005 11:32 PM

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