Credit Counseling Services
Credit counseling services provide resources to help solve your money problems. Counselors discuss your entire financial situation and help you develop a personalized plan. They can assist you with starting a budget. And they can help you find educational programs on money management.
Credit Counseling Service Locations
You can find free or low-cost credit counseling options at:
Credit unions
Extension offices
Religious organizations
Nonprofit agencies
It's important that your credit counseling service be accredited by either of these organizations:
Military Service Members
The Servicemembers Civil Relief Act (SCRA) assists active-duty military with financial burdens. Under this act, you may qualify for a reduced interest rate on mortgages and credit card debts. It can offer protection from eviction. It can also delay civil court including bankruptcy, foreclosure, or divorce proceedings. To find out if you qualify, contact your local Armed Forces Legal Assistance office.
File a Complaint About a Credit Counseling Service
Consolidation involves rolling your various debts into one monthly payment. These debts can include credit card bills or loan payments. If you have multiple credit card accounts or loans, debt consolidation can help simplify or lower your payments.
But consolidation can be risky. Before you consolidate, talk to a qualified credit counselor. Look for one accredited by one of these organizations:
Debt Consolidation Options
You may be able to lower your cost of credit by consolidating your debt through a home equity loan or home equity line of credit.
With a home equity loan, the lender advances you the total loan amount upfront.
A home equity line of credit provides a source of funds that you can draw on as needed.
It's important to keep in mind that these are secured loans that require you to put up your home as collateral. If you’re unable to make payments on time, you could lose your home.
Two other popular options are credit card balance transfers and debt consolidation loans. Read about the pros and cons of each.
File a Complaint About a Lender
If you have a problem with a lender involving debt consolidation, first contact that lender. If you can't resolve the problem, submit a complaint to the Consumer Financial Protection Bureau (CFPB).
A debt collector generally is a person or company that regularly collects debts owed to others, usually when those debts are past-due. This includes collection agencies, lawyers who collect debts as part of their business, and companies that buy delinquent debts and then try to collect them. The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.
What Types of Debts Are Covered?
The Act covers personal, family, and household debts. This includes money owed on personal credit card accounts, auto loans, medical bills, and mortgages. The FDCPA does not cover debts incurred in running a business.
What Happens After a Debt Collector Contacts You?
Within five days after a debt collector first contacts you, the collector must send you a written notice that tells you the name of the creditor, how much you owe, and what action to take if you believe you do not owe the money. If you owe the money or part of it, contact the creditor to arrange for payment. If you believe you do not owe the money, contact the creditor in writing and send a copy to the collection agency informing them with a letter not to contact you.
What Practices Are Off Limits for Debt Collectors?
A debt collector may not:
- Contact you at inconvenient times, for example, before 8 AM or after 9 PM, unless you agree to it.
- Communicate with you at work if you tell the debt collector your employer disapproves.
- Contact you after you send a letter to the collector telling them to stop, except to notify you if the creditor or collector plans to take a specific action.
- Communicate with your friends, relatives, employer, or others except to find out where you live or work.
- Harass you with repeated phone calls, profane language, or threats to harm you.
- Make any false claim or statement that you will be arrested.
- Threaten to have money deducted from your paycheck or to sue you, unless the collection agency or creditor intends to do so and it is legal.
File a Complaint About a Debt Collector
Report any problems you have with a debt collection company to your State Attorney General's Office, the Federal Trade Commission (FTC), and the Consumer Financial Protection Bureau (CFPB). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your state Attorney General’s office can help you find out your rights under your state’s law.
If you're unable to pay your creditors, filing for bankruptcy can help you get a fresh start. Bankruptcy involves liquidating or selling off your assets to pay your debts. Or, it can mean creating a payment plan. Before considering bankruptcy, you should first explore other debt management options. Bankruptcy information stays on a credit report for 10 years. It can also make it difficult to get credit, buy a home, get life insurance, or sometimes get a job.
Types of Personal Bankruptcy
Federal courts have jurisdiction over all bankruptcy laws, so you’ll file a petition in a federal bankruptcy court. There are two main types of personal bankruptcy:
Chapter 13 allows people with a steady income to keep their property. This would include a mortgaged house or a car, that they might otherwise lose in the bankruptcy process.
Chapter 7 is known as straight bankruptcy. It involves liquidating all assets that are not exempt under federal or state law.
File for Bankruptcy
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 established stricter rules. These rules apply to both consumers and attorneys. To file for bankruptcy, you'll need to:
File documents. This includes itemized statements of monthly net income and proof of income (pay stubs) for the last 60 days. Also, you should include tax returns for the preceding year (four years for Chapter 13 bankruptcies). Find out how to get a copy or transcript of your tax return.
Take a pre-filing credit counseling and post-filing education course to have debts discharged. Find an approved credit counseling provider through the U.S. Trustee Program.
Pay filing fees, plus fees for credit counseling and education.
The bankruptcy and petition process is complicated, so it can be difficult to file without an attorney. Attorney fees are extra and vary.
Report Bankruptcy Fraud or Abuse
You can file a fraud report with the U.S. Trustee Program at the Department of Justice (DOJ).
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Last Updated:
October 1, 2020