How To Get Credit and Debt Counseling

These days, many people are overwhelmed with debt. Realizing they can't get out of their financial problems alone, they seek credit or debt counseling. How does one go about getting this kind of counseling? Here are a few things to consider if you are beginning your search.

  1. Know the difference between credit and debt counseling. The first step in getting debt or credit counseling is to know the difference between the two terms. 
    • Credit counseling and debt counseling are not the same thing. Credit counseling is educational and often free. It's meant to help participants learn about things like how to save, how to use credit cards responsibly and how to pay off outstanding debts. If you file for bankruptcy, for instance, you must undergo credit counseling, ostensibly so the government is satisfied you won't go into bankruptcy again in the future. Credit counseling can help people with substantial debts get their finances organized and help prevent more debt pile-up or future problems by providing education. Credit counseling may lead participants to seek debt management to repay their debts. This is where debt counseling may come up.
    • Debt counseling is more focused on debt reduction and often involves a specific debt reduction plan which would involve having your debt counselors perhaps negotiate terms of repayment with your creditors. You will still have to pay monthly fees, for example, but you may have some rate reductions or fees waived. All payments will go to the debt management agency instead of to a variety of different people.

  2. Be a wary consumer. After a person seeking advice has decided whether you need credit or debt counseling, she should do careful research before choosing to take a person's advice. As you have probably seen, courtesy of various public service messages, just because a company says it is "non-profit" does not in any way mean it is reliable, legitimate, or not out to make a buck off your financial problems. Many debt counselors charge fees, some of them unnecessarily high. Others make false promises. Others don't spend sufficient time with the credit counseling part of the problem and just rush to get you to hand over your debt. As you would before using any service, check around and comparison shop, check with the Better Business Bureau (BBB) and your state attorney general's office to see if the agencies are legitimate. Also, go with your gut. If it seems like a counselor isn't out to help you as much as to make a profit, make a run for it. Check out this helpful tip list for choosing a good debt counselor at Bankrate.

    Finding the counselor to begin with might seem like the most daunting part of the whole task. Reach out to friends, colleagues, your church or local organizations for suggestions on where you might find some help. There are undoubtedly people around you who know what it's like to need debt help, and they may have some good suggestions (or cautionary tales) to offer. Also, check the Internet and the good old-fashioned Yellow Pages to find names of agencies. Then check them out carefully.

  3. Bring your real situation to the counselor. A lot of people are embarrassed by their debt. A lot of people don't want a stranger going through their financial lives. To get the best out of a counselor, though, people need to be honest about their financial situation. In fact, it might be the inability to "get real" that's landed some people in debt to begin with. Whatever you situation, make it a point to bring accurate information about your debt-  and any factors that contribute to that debt- when you go to your counselor. Otherwise, you will likely not get the help you really need.
  4. Be open-minded. There's a famous saying in 12-Step Recovery Programs - "It works if you work it." If you do careful research and find a legitimate debt or credit counselor, be open to the suggestions she makes about your finances. She may make suggestions or observations you don't like or don't believe will work. It might be easy to reject them out of hand. But consider that she is an expert with your best interests in mind, and try to do as she counsels you to do. Also remember that, if you're in credit or debt counseling, your own judgment with finances has maybe been a little off the mark lately, and following your plan instead of the trained professional's plan might not be a great idea.
     
    Then again, it may happen that you don't pick a good counselor the first time around. If you feel you're being led down a wrong road, or if you feel your best interests aren't at the center of the process, don't be afraid to take your business elsewhere.
  5. Ask questions. Another famous saying, this time from schoolteachers everywhere, is "There are no stupid questions except the ones which aren't asked."  Don't hesitate to ask your credit counselor or debt counselor any questions you might have about your debt, general debt, credit, their plans for your debt, or anything else that's on your mind regarding your financial well-being. Credit counselors and debt counselors should each be able to answer these types of questions and provide you with education about financial issues.

Debt and bad credit can be anything from a recurring nuisance to a daily reality ruining your quality of life. If you feel like you're in over your head, seek help from a trained professional who can help you get out from under your financial problems.

 

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