Bankruptcy - Use it if you must - avoid it if you can
As of October 17, 2005, if you are considering filing for bankruptcy, it is required that you
get credit counseling from a government approved organization, 6 (six) months prior to you
filing for protection under bankruptcy.  

This credit counseling organization must be approved by the U.S. Trustee Program which is
the organization within the U.S. Department of Justice that administers bankruptcy cases.
Questions to ask when choosing a
credit counselor:

  • Is your organization approved
    by the U.S. Trustee Program,
    the organization within the U.S.
    Department of Justice that
    administers bankruptcy cases?
  • What services do you offer?
  • Do you offer assistance in
    developing a plan to avoid
    problems in the future?
  • What are your fees?
  • If I can’t afford to pay your
    fees, do you offer an
    alternative?
  • What qualifications do your
    counselors have?
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  • Are your counselors accredited or certified by an outside agency?
  • What type of training do your counselors have?
  • Will my personal information be kept confidential and secure?
  • What steps to you take to keep my personal information confidential and secure?
  • Are your employees paid by salary or by commission?
  • What is the cost  for ONLY your credit counseling services and budget analysis that is
    required before I can file for bankruptcy relief?
  • How will I know that I have the correct certificate to file bankruptcy?
  • Does the certificate cost extra?  How much?
  • What other services does your company provide?

My thoughts about bankruptcy:

The new bankruptcy law was instituted, in my opinion, simply for one reason.  To put an end
to the “easy way out” mentality.

Whether this is a good law or not depends on whom you ask.  

However, in my experience having talked to many people as a bill collector, deciding to file
bankruptcy for most people was not a difficult decision.

I mean the idea of wiping out your debt, and for some, the idea of sticking it to the creditor,
was a palatable remedy.  It created an illusion of being debt free, when in reality it stifled
ones ability to progress financially.

The stigma alone was bad enough.  Some would argue that their lives were better after
they had filed.  They would tell you that they received credit card offers and lines of credit
1 to 2 years after filing.

First, I would say that those people probably cranked up those new credit cards and lines of
credit to the maximum and were back to square one, knee deep in debt, not long after.

Since they are not eligible to file for bankruptcy again for aperiod of time, being in debt
becomes twice as hard.

Second, the interest rates on those credit cards and lines of credit they received after filing
are certainly not favorable ones.  Paying exorbitant interest rates and annual fees and late
fees is what they will have to face for some years to come.

Bankruptcy was not set up to be abused.

It was set up for people that experienced a catastrophic situation in their lives that impaired
their ability to create income.  

Such as, their house catching fire, auto accident that left them disabled, death of a spouse
that caused a loss of income or any other such catastrophic situation that was unforeseen
that caused a stop or tremendous slow down in cash flow.  

If this is the unfortunate position that you find yourself in, I pray for you, and I strongly
suggest that, if you see no other way, seek out the bankruptcy protection that is afforded to
people in such dire situations.

Bankruptcy in my opinion should be considered only after all other options have been fully
explored.

Though it is true that the bankruptcy report should be removed from your credit bureau
report after 10 years, it is not forgotten by the creditors that suffered the financial loss.

Will future creditors hold this against you?  Who knows?  

Paying your debts is always the best way to go.

Having the stigma of bankruptcy follow you wherever you go is not something anyone
should have to bear.  And quite frankly, paying your bills is the right thing to do.