does working with a credit counseling company equate the same as bankruptcy on your credit report?

Answer 1

It is interesting that people are giving a thumbs down to the only answers that are actually correct.

Think through this logically. . . Credit Counseling Companies help you consolidate your credit and pay less than you owe. How do they do that?

They make arrangements that are similar to a bankruptcy. You pay pennies on the dollar. They stop accruing interest on your accounts. You think this makes your ceditors happy? NO. THey report it to the credit bureaus.

So YES it does equate te same as a BK. It may not seem fair because you are attempting to pay everything and get caught up, but the creditors are getting screwed in the process, so they don't think it is fair either and make sure that other creditors know about it.

Answer 2

Don't believe what you've been told ... Credit Counseling absolutely shows up on your credit report as a negative event. It isn't "quite" the same as a bankruptcy ... but for all intents and purposes it's the same. Say a bankruptcy rates a 1 on a scale of 1 to 10 with a 1 being the worst event. Credit counseling is the equivalent of a 2 or 3. Still a very severe hit. The reason is ... the purpose of the credit report is to gauge your ability to responsibly handle credit. By going to "counseling" you've essentially made it public record that you can't responsibly handle credit on your own and therefore you are a credit risk.

If you're down to basically a choice between a bankruptcy and credit counseling and you think that that is your only option out, then credit counseling is an option ... not a good one ... but still an option. You're much Much better off figuring this out on your own and working directly with your creditors to resolve any late payments and overdue bills rather than go the route of credit counseling.

Good Luck ... you can get out of this ... just be diligent!

Answer 3

Short answer, yes and no. No because a bankruptcy can stay on your credit report for up to 10 years, but, after the bankruptcy is discharged usually about 90 days after it is filed with the courts, people will crawl out of the woodwork to offer you credit, but with substantially higher interest rates. Working with a credit company you will not be able to obtain any kind of credit, until after you are done with them. Companies are funny about these things. Some will give you the benefit of the doubt and say that since you are trying at least to pay your bills, after you are done they may be willing to look at you credit wise. But, like the old addage goes, it won't happen overnight. Working with these companies could tie you up to five years depending on how much debt you have, and not being able to ask for credit for five years seems like a very long time. I am not saying file for the bankruptcy, but if you could get out from underneath the debt in two years, it probably would be worth it. Also when looking for a credit company, be very careful. There have been a lot of shady dealings the past few years that have put consumers farther behind. The best thing to do is to contact all your creditors yourself first, explain the situation, offer some sort of solution, and if that does not work look for other options such as the credit company or the bankruptcy. Either way it won't be easy

Answer 4

I have a friend that just joined a program with Debt Free America 888-268-2926. They are out of California but can help regardless of the state you are in. We are in Louisiana, for instance.

Here's the deal....some places make money off you....Debt free America does not. This was an organization created by the governement to help people avoid bankruptcy.

They look at all your debts, send you a detailed report, including the monthly amount you will need to pay over a 2-5 year period to be completely out of debt. At that point you deside whether or not to sign on with them.

I think it is a beautiful thing. There's no way debts could be paid off as fast as they can be on this program (unless money is in abundance).

My friend loves the program so much I've considered it!

Answer 5

From a mortgage lender's point of view, yes it does. They will hold off lending you money to buy a home until you have completely paid off the credit counseling. It's the same as a Chapter 13 Bankrupcy. The Chapter 13 and CCS do essentially the same thing, consolidate your debts that you then pay to a third party.

I applaud your decision to eliminate your debt. Just keep your goals in mind. If you plan to buy a home in the near future, talk to a mortgage broker before you start the program.

Answer 6

No! It is actually a way to cut back on your total owed by going through a credit counseling company, too! Good idea for those who need a little help digging out of the credit mountain they are under.

Answer 7

no! You're actually paying off your debts, the credit counseling usually just helps you negotiate a smaller interest rate while doing that. Creditors would MUCH rather you pay off your debt than file for bankruptcy, in which case they don't usually get much of anything.

Answer 8

Why not do the same thing yourself. There is nothing the company can do that you cannot do. You can speak with your creditors and make an agreement with them. You do not pay anyone to do something you can do yourself. Search management sites and pick up all the information you can from them and put your strategies and plans into place.