Many individuals who may be considering Chapter 7 or Chapter 13 bankruptcy are also reaching out to "credit counselors" and "credit repair" companies with increasing frequency.  Although there has been a recent surge in the number of these organizations that are available to offer help to consumers, there has also been an increase in the number of unscrupulous operators who are ready to take advantage of unsuspecting debtors.  The Federal Trade Commission's website offers a number of useful tips for avoiding such scams.  The FTC website advises:  "If you see a credit repair offer, here’s how to tell if the company behind it is up to no good":

• The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
• The company doesn’t tell you your rights and what you can do for yourself for free.
• The company recommends that you do not contact any of the three major national credit reporting companies directly.
• The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
• The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
• The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.

The FTC further explains:  "If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information."

The FTC website also offers similar tips on how to avoid unscrupulous offers of "credit counseling" - an area where corruption is perhaps even more widespread because most bankruptcy filers are required to complete credit counseling prior to filing as part of the 2005 Amendments to the Bankruptcy Code.  Before acting upon the advice of any organization that you are not completely comfortable with, you should discuss your situation with a bankruptcy attorney.  This is because, in some cases, the filing of a petition for bankruptcy protection under either Chapter 7 or Chapter 13 is the only realistic option, yet some credit repair organizations either lack the expertise or are simply not motivated to discuss these possibilities. 

-Drew Broaddus