If you feel like your finances are out of control, you're not alone. Credit debt, mortgages, student loans, car payments: It all adds up for many of us. Sometimes figuring out how to subtract from your total debt, as opposed to adding to it, is tough. Getting out of debt sometimes requires expert help. Debt counseling is one way to get such help. Here are some things to know about debt counseling.
- Realize counseling is only as good as the counselor. As you begin your search for a debt counseling program, looking online, in the yellow pages, asking friends or colleagues, you will quickly learn there's no shortage of choices. Many, many debt counseling services exist. That's why it's so important to do your homework and pick a reputable counselor. Otherwise, you may end up just wasting your time and money. Ideally, a debt counselor should look at your individual situation and help devise a plan to get you out of your financial jam. But increasingly, disreputable counseling agencies and agents are not helping clients and are more interested in collecting their fees.
With "buyer beware" in mind, there are a few things to check up on when you seek a debt counselor. Check the reputation of the counseling service with your state's attorney general and/or the local Better Business Bureau. Check to see if the agency or individual is accredited with a reputable organization that has high "best practices" standards (for more on accreditation and best practices, see the link to the National Foundation for Credit Counseling). Make sure the agency is offering individualized services and not just foisting "debt management plans" on everyone.* Credit counseling (education on savings, spending, budgeting, etc.) should also be included in the debt counseling you receive. One last, key warning I've seen in many places: Don't be fooled by the term "nonprofit." Anyone can say that he is nonprofit; that doesn't mean that he's not out to make a profit off of you or that he knows what he's doing.
Tell the truth, the whole truth, and nothing but the truth. Some people are very open about their debt and their financial stress. Others are in some way ashamed of how much they owe, how they got into the hole, and how powerless they feel. If you are the latter, try to put aside your apprehensions when you speak to your debt counselor. If you don't provide the counselor with an accurate picture of your problem, how can she really help you out? Go to your sessions open to providing the counselor with all the information she requests about things like total debt, income, how you spend money, whatever it might be. It's just like going to a doctor, in some ways - if you don't tell them the real symptoms, they can't cure what's wrong.
Learn as you go. As mentioned, part of debt management should be credit counseling- education on things like saving, spending, debt, and debt relief, for example. If you feel you have a pretty good understanding of all this stuff, keep an open mind and see what you can learn anyhow. If you are somewhat clueless about finances, even more reason to try to learn as you receive counseling.
Be patient. Sometimes when people seek help for a problem, they believe a solution will present itself in an unrealistic time frame. Just as seeing a doctor won't cure your broken leg overnight, seeking debt counseling will not result in your instantly being out of debt. Instead, you will have someone to help you handle creditors, payments, and help get you on the right financial track for the future. If a debt counselor offers you a "get out of debt quick" scheme, you should seek another counselor. It took you time to get into debt; it will take you time to get out.
They say love of money is the root of all evil. Being in debt seems to be the source of many people's everyday stress. If your debts are beyond what you can handle alone, why not seek a reputable and helpful debt counselor and stop trying to shoulder the burden all alone? Sometimes, the smartest thing a person can do is to admit that they don't have all the answers they need. With help, you can be on your way to a smoother financial future, one with far less stress. And hopefully, far less debt.
*Debt Management Plan: A debt payment plan negotiated by the debt counselor aimed at paying off "unsecured" debts like credit cards through a deposit you make with the counselor who then disperses the money to your creditors.