Affordable debt consolidation is just around the corner with Consumer Credit Counseling
Man trimming his gold colored credit card
Discover what services a credit counselor may offer youHere is where you can find answers to frequently asked questions about consumer credit counseling

What Can Credit Counseling Do for You?

You've clearly been searching the Net for advice on dealing with your debt. And you've likely come across hundreds of sites offering advice, how-tos and services aimed at helping you cope, or even offering to erase your debt. Well, let's be honest here: If it sounds too good to be true, it likely is. And if you've had a hard time managing your money and your credit yourself, then all the how-tos in the world aren't going to make a difference. You need an expert who can come alongside you. And that is exactly what a consumer credit counselor is. There are many techniques that they can utilize to help get things under control for you. There are four primary tools at their disposal:

  1. Develop a budget Budgeting is a frightening word to many. It smacks of restriction and hardship, of sack lunches, of scrimping and saving like a miser. But a budget doesn't mean living like a prisoner in a war camp. It is really not much more than accounting for all the outlays on one hand and the amount of income you have on the other. Making a budget can even help you identify all those incidentals you might forget that you spend on each week, like coffee and cigarettes. They might also help you determine if you need to take another part-time job to make ends meet. A budget removes the mystery from your finances. Better yet, a credit counselor can take away the mystery around creating a budget, and actually create one for you that is tailor-made. This is often the very first thing that a counselor will do for you. Then it is up to you to follow it as best you can to keep yourself on the road to financial recovery.
  2. Negotiate down your debt While some are advocating cutting out a credit counselor, suggesting that consumers attempt debt negotiations themselves, it isn't for the faint of heart. It can be humiliating and emotionally difficult for a consumer to contact those they owe directly. This cushion between you and a credit card company, for example, is one of the primary reasons people enlist the help of a professional credit counselor. Debt negotiation involves contacting credit card companies and other lenders to convince them to either lower the interest on your debt, accept a delay in payments, or even to forgive a large percentage of your debt in hopes of being paid a lump sum settlement. Many times they are eager to settle in order to close the books on your debt for as little as half what you owe! But the negotiations can be very taxing and drawn out if the consumer chooses to tackle the process themselves. This is not possible in every case, since the lender will typically want immediate payment. It also can have a dramatic impact on your credit score. But if your score has already dropped significantly due to missed payments or even debts gone to collection, then this might be worth it.
  3. Consolidate your debts Debt consolidation lumps all of your outstanding debts into a single monthly payment. It can really help make a budget easier to follow. Just about any type of debt can be consolidated, even student loans (though not loans from more than one spouse). Only those whose credit has not yet been seriously damaged can usually qualify for a consolidation loan, however. Sources for consolidation include transferring balances to a new, lower interest credit card, taking out a personal loan, or borrowing from the equity in your home.
  4. Counsel you about bankruptcy A last resort nuclear option is bankruptcy. But sometimes this is the last best hope for some who have really been overwhelmed by debt and a lot of it. Recent federal laws passed in 2005 require that those seeking bankruptcy must be counseled by a credit counselor, as well as take course on money management and proper budgeting. It isn't to shame anyone or punish them: it's intended to help people stay out of debt because it is extremely costly to them emotionally and financially. And hopefully, with the right credit counselor, they will be able to help you get out from under your debt without this last resort.