Credit counseling and DMPs, Part 1
By Eugene S. Melchionne, Connecticut Bankruptcy Attorney on May 15, 2007 in Connecticut, General Bankruptcy Information
What is the difference between the credit counseling required before I file for bankruptcy and a debt management plan (DMP)?
The revisions to the bankruptcy code passed in 2005 require that before you file for bankruptcy, you must conduct ‘credit counseling’. See “What Is The ‘Credit Counseling’ That Is Required Under The Bankruptcy Laws?” The reality is that the credit counseling is really nothing more an independent verification of your budget. How is this related to credit counseling? It isn’t. It is, however, another hurdle to jump over prior to filing a bankruptcy case. Every month you make another payment on the account is another month’s payment the credit industry has squeezed out of you.
The General Accounting Office has found that the value of the required credit counseling prior to bankruptcy is not clear. See, Report GAO-07-203, April 6, 2007 The pre-bankruptcy credit counseling does not help you pay your bills and does not magically add money to your budget. In fact, it doesn’t really teach you anything and serves no valid purpose.
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