Should I consult with one of these? Absolutely yes and it is required before you file for bankruptcy, but BEWARE of scams. First, a reputable counselor will not charge a large sum of money up front. Only go to one that charges a small amount for one session and if they can work a payout deal THEN they get paid a monthly fee. This is called a debt management plan. Debt consolidation often means you take out another big loan to pay off all your other loans and only have one payment.

Debt CounselorsHow do I find a reputable counselor? One way is to see if they are part of the National Federation of Credit Counselors. Another is to pick one from the list approved by the United States Bankruptcy Trustee. Also read the Federal Trade Commission info on their website-it is excellent. If you need help with your mortgage or foreclosure issues find a housing counselor at the United States Housing and Urban Development website.

Am I better off doing a debt mangement plan or a bankruptcy? If you can afford it, a debt management plan looks better on your credit report than a bankruptcy. The problem is the debt management plan does not reduce the amount you owe very much, but in a bankruptcy you can discharge some, often all, of your debt. In sum, it depends on how big of a hole you are in(amount of debt) and how big is your shovel to get out (money you have).

Is it true I have to take two classes with these counselors to file bankruptcy? Yes, you take one before you file for bankruptcy and one after you file. They are one session and a couple can take it at the same time. It can be done in person or over the internet. The first class is a last ditch effort to look at your situation and see if you can do a repayment plan to avoid bankruptcy. The second class is a more practical how to make and keep a budget. They are not expensive less than $100 per person.