If you want to file for bankruptcy, you will be expected to provide a credit counseling certificate at some point during the process. This is because, to finalize bankruptcy, the courts need to determine that you can demonstrate how to rebuild your credit. The process is also helpful because you can learn some practical tips that can help you save money and not get overwhelmed by debt again. Here’s what to expect to learn from a credit counseling program.
HOW TO BUDGET
Many of the struggles with debt can happen because of not knowing how to budget. Maybe you were never taught, or the stresses of life became overwhelming. You’re not alone. Especially since the pandemic, 20% of Americans admit to having no emergency savings, according to a 2020 Bankrate poll. A budget helps organize your money by looking at your income versus your expenses like credit card and car payments, rent, etc. It’s easier to tackle debt payments when you know what you can afford. An effective budget helps you organize your finances to meet your goals more easily and often quicker than without one.
CREDIT REPORT ANALYSIS
When was the last time you looked at your credit report? A credit report is a document that demonstrates your creditworthiness on paper. Lenders use credit reports as one factor to determine whether or not to give you a loan. Although you may be familiar with your credit score, the actual credit report provides information behind that score. Late/missed payments or using too much of your available balance are two common scenarios that can negatively affect your credit. Another factor is your credit history, which refers to how long your debt payments have been reported to the credit bureaus. While reading a credit report is a little more complicated than this, a credit counselor can help make sense of the information you see on the page and inform you on how to avoid making similar mistakes in the future.
DEBT MANAGEMENT
If you have a mountain of debt to pay down, it can be overwhelming to know where to start. A certified credit counselor can analyze your situation and give specific advice for your circumstances. There are several methods available to tackle debt payments, but every situation is unique. Instead of applying a method to your debt because it’s popular, consult with a credit counselor to make sure your plan is doable for your income and other expenses. You may want to pay down larger balances first or focus on the amount with the highest interest before moving on to the others. Credit counseling can give you clarity on which option is best for you.
Thinking of filing for bankruptcy? Attorney David Brunelle is here to help you every step of the way, including providing you with a list of local and approved credit counselors. Get started by calling David at (413) 539-5959 or email david@davidbrunellelaw.com.