Legal Question in Credit and Debt Law in Wyoming

Credit Counseling--Consolidation Program and Late Charges, Bankruptcy Alternatives

The problem with debt consolidation programs is that they have no binding effect upon any creditors, unless the creditors agree to be bound. Details such as late fees are controlled by any contract negotiated by the agency representing the debtor and there are no restrictions upon the creditor unless they are set forth in the resulting agreement. Fewer and fewer creditors these days are even willing to go along with the repayment plans at all. Instead, they proceed with collection lawsuits regardless of the consolidation attempt, ruining any benefit of the program for the payer. In such situations, the debtor is often far better off discussing their situation with an experienced bankruptcy lawyer. Unlike voluntary debt consolidation programs, bankruptcy comes with the mandatory protective powers of the United States Bankruptcy Court. Lawsuits are frozen and remain frozen so long as the debt is dischargeable and the debtor complies with all his duties. At the conclusion of the case, if a discharge is granted, the creditor is forever prohibited from future collection activities. Even then, however, the creditor may truthfully report the status of the debt on credit reports, i.e., that it was discharged in bankruptcy, and they can report this for up to ten years. Perhaps the most unfortunate thing about �consolidation� programs is that the term is essentially meaningless. It can refer to everything from refinancing a home to pay debts to a totally voluntary payment system, to a chapter 13 bankruptcy. Additionally, fees paid to such non-attorney consolidators are often totally wasted with no benefit to the debtor and the debtor eventually is forced to spend extra money to go bankrupt anyway. Legal fees for bankruptcy are not all that much higher than those charged by the consolidators and far likely to yield positive results.