Bankruptcy Overview

Credit Counseling and Debt Consolidation

Alternatives to Bankruptcy: Credit Counseling and Debt Consolidation Services

Bankruptcy may not be your only option. There are alternatives that, given the size of your debt, may be better for you. Contact me, Detroit bankruptcy attorney Walter Metzen. I can help you decide the best course of action to take in pursuing the debt relief you deserve. I offer clients flexible appointment times and same day appointments for your convenience. Also, a free initial consultation is provided so you can speak with me about your situation without cost or obligation.

Below, I have included some general information about alternatives to bankruptcy.

Credit Counseling (before Filing Bankruptcy, the Law requires you to talk to a Credit Counseling Agency and get a Certificate)-This can be completed in my office over the phone or on the internet.

Living paycheck to paycheck? Worried about debt collectors? Can't seem to develop a workable budget, let alone save money for retirement? If this sounds familiar, before you file for bankruptcy you may want to consider the services of a credit counselor. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But beware--just because an organization says it is "nonprofit" doesn't guarantee that its services are free or affordable, or that its services are legitimate. In fact, some credit counseling organizations charge high fees, some of which may be hidden, or urge consumers to make "voluntary" contributions that cause them to fall deeper into debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

Reputable credit counseling organizations advise you on managing your money and debts, help you develop a budget, and usually offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

A tip from Walter: I recommend the services of GreenPath Debt Solutions. GreenPath has been helping Michigan residents for many years, and I frequently refer my own clients to them. Greenpath has helped thousands of people manage their debt and avoid bankruptcy. I frequently advise potential clients who come into my office for a consultation to give GreenPath a try because they really don't have enough debt to file a bankruptcy. GreenPath is also known as Consumer Credit Counseling Service of Michigan.

Debt Consolidation

Debt consolidation simply means that you take many debts and role them into one large debt, sometimes with lower interest rates and longer payments terms. This can be accomplished in many ways, but is usually done by consolidation in a home equity line of credit, refinance, or by transferring balances to one lower interest credit card.

Debt consolidation is not for everyone. Approximately 70% of Americans who refinance or consolidate debt by other means are back at the same or greater debt levels within two years. Debt consolidation requires a commitment to paying down the existing debt while not incurring new debts.

Debt Negotiation or Settlement

There are companies that will work as your agents to negotiate or settle your debts. These debt settlement companies generally collect a monthly payment from you that they hold and then use to negotiate settlements on your cards. Many of these companies charge fees on your total debt and will deduct their entire fee up front before using your payments to settle debt. Using these services does not stop a creditor from suing you for payment of the debt. Sometimes, you can accomplish the same thing the settlement companies do by calling your creditor and asking if they will negotiate a settlement with you.

A word of warning: The Federal Trade Commission has issued consumer warnings about credit counseling and debt consolidation services that promise to reduce your debts dramatically or to “repair bad credit”. Some of these organizations, many of them non-profits, make exaggerated claims and charge high fees for their services. For example, the FTC has filed charges against AmeriDebt for defrauding consumers of millions of dollars through excessive, hidden fees while falsely pitching itself as nonprofit. A reputable credit counseling organization such as GreenPath Debt Solutions will give you free information about itself, the services it provides, and the fees it charges without requiring you to provide details about your situation. You shouldn’t deal with any organization that won’t provide this information. For more advice on choosing a credit counselor, go to

Another word of warning: If you are a homeowner, creditors may try to pressure you into borrowing against the equity in your home to pay off unsecured debts like credit cards or medical bills. Putting your home at risk to pay these creditors is rarely a good idea. Before you consider a home equity loan you should consult with a housing counseling agency by calling HUD at 1-800-569-4287.

Other Alternatives to Lower Debt

Negotiating lower interest rates on credit card debt

If you’re paying high interest rates on credit card debt, you may be able to negotiate better terms. Many people have used this approach successfully and you have absolutely nothing to lose by trying. Bear in mind that credit card companies compete for your business and might lower your rate if necessary to keep you as a customer. Get on the phone with your credit card company and say something like this: “Hello, this is_________. I am using your company’s credit card, but I have received offers to transfer to another company at a lower rate. If you can’t give me a lower rate, I’m going to transfer the balance and cancel my account.”

Negotiating a workout for a mortgage default

If you fall behind in mortgage payments, you may be able to get the lender to agree to a workout, which is a temporary or permanent change to your mortgage terms. Because workouts are complex, you should try to get help from a non-profit housing counselor or lawyer with experience in mortgage workouts. To find a HUD-approved housing counselor to advise you, call 1-800-569-4287.

Debtor’s Anonymous

If your problem is not just debt, but chronic debt, you may benefit from a program that can help you learn to make conscious decisions about how you spend money. While this is not necessarily an alternative to bankruptcy, it may be a step you need to take to keep from getting back into financial trouble after bankruptcy. Many people are trapped in a pattern of impulse buying or emotional spending and seem to lack the ability to live within their means. Debtor’s Anonymous is a free, self-help program that provides educational materials and a support system for people who want to regain control over their finances. If you feel embarrassed about your financial situation, you may be relieved to learn that many prominent, successful people have struggled with compulsive spending problems and have found help through Debtor’s Anonymous. To find a Debtor's Anonymous meeting in the Detroit Area call 734-489-0252 or visit for more information.

Contact a Detroit bankruptcy attorney that can help you decide the best course of action to take in pursuing the debt relief you deserve. I offer clients flexible appointment times and same day appointments for your convenience. Also, a free initial consultation is provided so you can speak with me about your situation without cost or obligation.

We are a Debt Relief Agency helping people file for bankruptcy relief under the Bankruptcy Code. Let us help you decide if bankruptcy is right for you.

Bankruptcy attorney Walter Metzen represents clients throughout Southeast Michigan, including the communities of Detroit, Southfield, Warren, Roseville, Farmington Hills, Ann Arbor, Belleville, Canton, Clinton Township, Dearborn, Dearborn Heights, Hamtramck, Highland Park, Holland, Howell, Lincoln Park, Livonia, Macomb, Northville, Plymouth, Port Huron, Redford, Rochester, Saginaw, Southfield, Sterling Heights, Taylor, Trenton, Troy, Westland, Wyandotte, Ypsilanti, Mount Clemens, Howell, Oakland County, Macomb County, Wayne County, Washtenaw County, Livingston County, and all of the surrounding areas.