Credit Counceling..does it work?

[broderp]

I'm not talking about the court mandatory ones for filing BK, but the ones you see advertised every where, including here, that claim they are an alternative to filing BK.

I've seen so many horror stories, from both news and TV about people being worse off than before they started, crooked scams that take money you expect to go towards bills, but instead go to these companies instead. Lets not forget all the INFOmercials late at night on the topic.

They claim they can lower you interest rate and payment and get you out of debt quickly.

HOW?

What do they do to negotiate such a deal with any Credit card company that makes the comapany say "SURE, we'll let Mr. Smith pay only 3% interest (from 30%) and lower the payment by 2/3rd what he pays now!?"

Its a lose siduation for them, otherwise they should have given that offer to the consumer already. Are they threatened with BK? So it's either get what you can or NOTHING at all? The problem I see with that is what to stop them from CLOSING YOUR ACCOUNT and putting NEGATIVES in your Credit Report during or AFTER you pay them off?

If I were them, I'd also close the account! So how does CC counceling work?

[lrprn]

In a last-ditch attempt to avoid filing bankruptcy, we tried credit counseling using a very reliable company (no Better Business Bureau dings, recommended by a friend who is a financial counselor, etc) Went through the interview, filled in all our many debts, and agreed to a $800 monthly payment to most of our non-secured credit cards and loans to be disbursed by the credit counseling company. After eight months of payments totaling $6400, we figured out that we were only $900 ahead of where we started. The worst - although the credit cards had made agreements with our counseling company, rather than just canceling our cards, most of our cc creditors continued to raise our APRs and assessed late penalties instead digging our financial hole even deeper. The cc and loan companies didn't care that we were teetering on the edge - they just wanted to maximize their profits on us as quickly as they could any way they could before we crashed.

Credit counseling was a total waste of our time and worst of all, a total waste of thousands of our dollars - we ended up filing Ch 13 anyway. I hope you decide not to waste your time - it's far better spent arranging for several free 1/2 to 1 hour consultations with a bankruptcy lawyer.