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What does a credit counseling service do? Bankruptcy attorney David Lozano reveals the truth!

Clalifornia Debt ReliefIn the blog prior to this, I revealed the truth about debt settlement agencies. Today I want to shed a little light on another service known as a credit counseling service. Now, perhaps you think I’m just partial to bankruptcy since I’m a bankruptcy attorney. Well, you’re right! Bankruptcy is a solution to the problem, not a temporary fix or way to delay the final decision of what to do about your debt. That’s the reason I chose the this job. I want to truly help people settle their debt!

So what’s so bad about credit counseling services? Instead of giving you a list of reasons why I think their service is a hoax, let me tell you the facts. Credit counseling services give advise (for a fee) about how to manage your finances by budgeting your money, paying bills in a prompt manner, etc.

The downside to this is that you’re probably already past the point where managing your finances would do any good. This kind of advise would have been useful before you were buried up to your eyebrows in debt. On the upside, it makes for good future reference– when they’ve helped you get debt free.

After the financial lesson, they try to negotiate with your creditors to get them to lower the amount of money you owe. If you’ve read my previous blog post, this might sound familiar. It’s the same thing debt settlement agencies try to do, the key word being “try”. Just as with the debt settlement agencies, there are no guarantees that the credit counseling service can lower your payment.

On the plus side, credit counseling legislation has recently enforced new rules about the criteria credit counseling services must meet to be exempt under Code section 501(c)(3) or 501(c)(4). Some of the rules include, the service must meet the needs of the client and must charge reasonable fees. (To see more of the credit counseling legislation go to the IRS website at

Incidentally, the Law Offices of David Lozano already enforce such policies and has done so for years! I consider these and the other criteria in the new legislation to be no-brainers.

If those reasons weren’t enough to convince you, here’s one more for you to take into consideration. There’s something crucial that bankruptcy attorneys offer, which credit counseling services do not. Bankruptcy attorneys can inform you about Chapter 7, Chapter 13, provide legal advise on all of the options available to you as well as offer financial management advise. Credit counseling services are not qualified to give legal advise!

Now that you know the facts, you will be able to make an informed decision about which service you choose to help you overcome the overwhelming debt you’ve been struggling with. Just to make things convenient for you, here’s how to contact me. Together we can get you debt free in no time!

David Lozano, Attorney at Law
Contact me today for a free consultation
800-974-5680/Se habla español

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