We offer free bankruptcy counseling.  But you are also  required to have a "Bankruptcy Counseling class" before and after filing bankruptcy.  We recommend the simple class through FinancialLit.org which can be done by phone within an hour.   

These are drawbacks to settling debts through Debt Management services also known as credit counseling services:

1. When you pay through Debt Management companies the banks normally turn in a 1099.  You are taxed as income for the amount of the debt you are forgiven.  But, if your debt is extinguished in a bankruptcy there is no tax!

2. Over 90% of Debt Management plans fail.  People rarely complete Credit Counseling plans.  But in Chapter 13, if you make most of your payments and can't finish you may get an early hardship discharge or convert to a 7.  If you don't make all of the Credit Counseling payments you retrun to owing it all.  Many Debt management clients find their credit trashed and their time and money wasted.  With debt management you must complete all of the credit counseling payments or it fails.

3. Debt Management agencies promise they can force credit card companies to settle accounts for pennies on the dollar.  The truth is that no credit counseling agency can force banks to accept 50 cents on the dollar.  In some states, credit card companies can accept credit counseling payments and still sue for the complete amount later.  These states have no accord and satisfaction rules.  Only the bankruptcy court can force creditors to take pennies on the dollar and many bankruptcy plans offer 10% or less on the dollar. Debt Management agencies and their plans can't do that.

4. Some Credit Counseling agencies have taken payments from customers and filed bankruptcy themselves.  Debt Management agencies such as Ameirdebt pay themselves from the dollars you pay them.  Often Debt Management agencies take up to 50% of what you pay them as a "fee".   This has left hundreds of people in Kentucky still in debt and their money taken.

5. Credit Counselors often advise people that by paying 50% of what you owe that you can "repair your credit record".  If you partially repay your credit will normally be just as bad as if you had filed bankruptcy.  Both Debt Management plans and bankruptcy leave an I-9 unpaid record that banks had to charge off the debt.

   Download your free  Lexington Kentucky bankruptcy manual or our PowerPoints.