The bankruptcy courts of the United States are empowered under Article 1 Section 8 of the US Constitution.   All bankruptcy cases are under the United States Federal Courts.  The fundamental purpose of bankruptcy is to give a fresh start or a way to reorganize existing financial circumstances.

Isn't Credit Counseling and Credit Consolidation better than Bankruptcy?

Credit Consolidation and Credit Counseling services do not necessarily help protect you from a bad credit rating.  Many Debt consolidation services actually function the same as just any other collection agency.   Additionally IRS rules allow the consolidation service to receive a "fair share" of the money you would be paying.  The more you pay the more the credit consolidator may get as a "fair share."

In some situations the services only delay the filing of bankruptcy and sometimes complicate the filing of bankruptcy.

For additional information, the following link takes to an IRS page regarding Credit Counseling Groups:  (These links take you directly to IRS website links on this subject)

IRS Takes New Steps on Credit Counseling Groups Following Widespread Abuse

Can a credit counseling organization receive “fair share” payments from credit card companies and qualify for tax-exempt status?
 
What has the IRS found during its investigation of the credit counseling industry?

 

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