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Credit counseling became part of the bankruptcy process in the United States with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. As a result of this legislation, your Chapter 7 or Chapter 13 bankruptcy case will be dismissed if you cannot prove that you completed a credit counseling session, with an approved credit counselor, within the preceding 180 days.

In other words, in the United States, your bankruptcy will not start until you can prove that you have completed credit counseling.

This is in direct contrast to the personal bankruptcy system in Canada, where credit counselling (yes, in Canada we spell it with two l’s) is an integral part of the bankruptcy process, but it is completed during the bankruptcy, not before you file.

It appears that the American bankruptcy reform in 2005 was championed largely by large credit card companies and other lenders, and they argued in favor of the credit counseling requirement primarily, it would appear, as a way to talk people out of filing bankruptcy. The mandatory pre-bankruptcy credit counseling session, among other things, discusses alternatives to bankruptcy. Since credit counselors do not also serve as bankruptcy attorneys, it is logical to assume that they will, at the very least, make sure all debtors are fully aware of their non-bankruptcy options.

In Canada, the process is somewhat different. First, all bankruptcies are handled by private individuals, generally with an accounting background, who are licensed by the federal government. In Canada, practicing lawyers are not permitted to act as trustees in bankruptcy. The trustee handles all aspects of the file, including collecting assets from the debtor, and distributing the proceeds to creditors.

In Canada, prior to filing a consumer proposal (similar to a Chapter 13 filing in the United States) or a personal bankruptcy (similar to Chapter 7), the debtor is required to meet with a licensed trustee in bankruptcy, and the trustee is required to explain to the debtor all of their options, including such non-legislative options as debt consolidation and debt management plans through a credit counselor. The debtor then decides whether or not they will file bankruptcy.

During the bankruptcy (or proposal) the debtor is required to attend two credit counselling sessions.

The first credit counselling session discusses money management, spending and shopping habits, warning signs of financial difficulties, and obtaining and using credit.

The second stage credit counseling session is designed to determine the causes of the insolvency, and to provide the debtor with the skills necessary to avoid future financial problems. The credit Read more…

It is a well-publicized fact that more of us are getting ourselves into greater debt, and this may be true for you. The embarrassment of your financial situation can mean you are unlikely to seek credit counselling or other credit management solutions. Increased house prices and greater cost of living can force you to turn to heavy borrowing. While this works in the short term, it undoubtedly leads to greater financial burden in the future. Is there anything you can do to stop this trend in your life?

Credit Counselling Helps People with Bad Credit.

It is much easier to borrow money now than it ever has been. This can prove helpful when seeking a first-time mortgage or wanting to borrow some money to buy that essential purchase. In the long run, borrowing money at the increased rate you are charged can lead to financial ruin.

Secured credit cards can be obtained with a few simple clicks of a mouse, and you rarely think about the consequences of your actions until it is too late. Credit counselling can help. A credit counselling service looks at your finances and works out exactly how much income and outgoing you have and then creates a repayment plan to help you pay off your debts. They contact your major lenders to agree a reduced repayment rate, in order that you can pay off all of your debts, and, above all, they can help set your mind at ease.

Structured Repayments.

Having many different debts with many different companies Read more…

In these days of increasing tendency towards spending money at the first opportunity because of consumerism, to incur debts is no longer seen as a sin. Instead debts are taken as a normal financial happening in one?s life and therefore the emphasis is now on debt management. Through adopting ways of debt management, one can keep debts at manageable level and from there can even eliminate them.

Debt management is a way for effectively controlling your spending habits. Also it involves some technique for eliminating debts for ever so that you start all again learning from mistakes.

You must come to conclusion as to why you are under heavy debts? You will find that your uncontrolled spending habits have landed you in trouble. See what is responsible for the spending spree? In most of the cases credit cards are the culprits. Credit cards allow you to buy now and pay later facility. This means you do not think twice before spending. But ultimately you have to pay for what was bought. If there is late payment on buying through credit card, you have to fork out high penalties to the credit card company. There is already a very high interest rate that you are paying on credit cards. It is advisable to cut numbers of credit cards in use for controlling spending habits. Instead use debit card as this way you only spend up to the amount you have in your account.

For effective debt management, make a budget so that you beforehand know where you stand financially. You can even take help of experts in making budget so that you do not deprive your self of necessary spending. Once you have finalized the budget, stick to it for long term results.

In case you have incurred huge debts, then it would be advisable to eliminate them immediately as these debts were of higher interest rate. You should take a debt consolidation loan at lower interest Read more…

Ever wondered what is Credit Counselling? There are occasions when you might encounter a financial situation that is beyond your scope which is when a session with a credit counsellor could be beneficial.

If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counselling organisation. Many credit counselling organisations are non-profit and work with you to solve your financial problems. But be aware that, just because an organisation says it’s “non-profit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counselling organisations charge high fees, which may be hidden, or urge consumers to make “voluntary” contributions that can cause more debt.

Most credit counsellors offer services through local offices, the Internet, or on the telephone. If possible, find an organisation that offers person to-person counselling.

If you are not sure of how to contact a counselling service, check with your financial institution, local consumer protection agency, friends or family as they may be a good source of information and referral.

Reputable credit counselling organisations can advise you on managing your money and debts, help you develop a budget, and offer free Read more…