Should I Seek Credit Counseling?
Credit counseling may be a good idea to avoid bankruptcy, however, keep in mind certain things. Most credit counselors get paid by a percentage of what is paid to the creditors, by the creditors receiving the funds. This means that they have an interest in seeing that the creditors get the maximum. Credit counselors, therefore, do not have a "confidential relationship" with you.

A confidential relationship is the type of relationship you have with an attorney. The attorney is legally obligated to avoid conflicts and represent only your interests. An attorney could be disciplined or disbarred from accepting payments from adverse parties, such as your creditors. Statements made to attorneys are always confidential, if made in private (between you, your spouse and the attorney, with no one else present). Statements made to a counselor are not.

Credit counseling can be good for some people. It helps many people avoid bankruptcy, however, it is an open question whether it makes much of a difference on your credit record. The new bankruptcy law may require counseling, however, for now, there is no reason to follow the mandates of a statute that may never be passed, unless you want to for your own reasons.

In some circumstances, credit counseling is a very wrong answer. Here are a few of the more important circumstances to consider:

1. You should not seek credit counseling first (you should seek legal counsel) if your home or other real estate is in foreclosure.

2. You should not seek credit counseling if you have been sued in court.

3. There may be other reasons. If you have a question, it is always better to speak with an attorney first. Credit counselors simply cannot give legal advice you can rely upon, like an attorney can.