Is Credit Counseling the Right Move For You?
by Ellise Walsh

For those consumers struggling with high levels of credit card and other debt, there is plenty of help available in the form of credit counseling and debt management services. More and more consumers are finding themselves drowning in a sea of credit card debt, and there are many companies and organizations willing to throw them a life preserver. Not all available help is equally valuable, however, and it is necessary to watch out for shady deals when seeking credit counseling.

A good place to start is by getting references from family and friends who have experienced similar circumstances. You may know someone who had problems with debt and was able to turn things around. Don’t be afraid to ask them how they did it and where they turned for help with their finances. These personal recommendations can be very valuable.

It is also important to schedule a face to face meeting with a credit counselor before signing up for any services. A good credit counselor will conduct a thorough interview that covers all aspects of your financial life before making a proposal. Beware of any credit counselor who rushes the interview or seems to eager to offer you a plan. A reliable credit counselor will make sure he or she has a thorough understanding of your income, your debt and your finances before making any recommendations or starting a debt reduction strategy.

Likewise, a good credit counselor will require that their clients take some educational courses on budgeting and debt management. These classes can be the most valuable part of credit counseling. A good financial education can mean the difference between staying debt free and ending up back at the debt counseling service six months later.

The best time to seek help with excessive debt is ‘as soon as possible” but if you find yourself in so deep that you cannot make even the minimum payments, you need help right away. A good credit counselor will contact your creditors on your behalf and work out a payment schedule. You then make your monthly payments to the credit counseling service, who in turn distributes the payments to your creditors using the formula they agreed to.

Credit counseling is an important step for those who find themselves in debt over their head. It is important to remember, however, that credit counseling and debt reduction are only the first steps. The most important step is the education you receive and the knowledge you acquire. Only by becoming a smart consumer and user of credit can you truly get your debt under control and remain debt free for life.



Credit Counseling & Debt Settlement—We’ve also written articles about these alternative forms of debt repayment. You may want to look into each of these to see which one is right for you and your current situation.

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