I Need Help With Debt & Credit Consolidation

Many consumers are faced with debt and credit concerns. Maxed out credit cards, overdue bills and late payments are only a few of the financial troubles consumers must deal with. Proper money management and financial counseling are some of the ways consumers can take control of their finances and begin to reduce debt. Several public and private organizations are available to help you with debt and credit consolidation.

Debt Management

Credit counseling agencies use debt management programs to help consumers simplify and properly manage monthly debt obligations. Debt management programs focus on unsecured debt which is any debt not tied to assets. For instance, high interest credit cards, department store cards, personal loans and collections are some of the obligations debt management programs aim to reduce or eliminate. Credit counseling agencies help families establish a budget and then work with creditors to accept monthly payments for debt obligations. Over time, consumers are able to pay down credit balances.

Consolidation Programs

Credit consolidation combines multiple debts into a single monthly payment. Consolidating debts allows consumers to reduce interest rates, lower monthly payment obligations and possibly cancel late payment fees. Credit counselors assist consumers in identifying the debts that are eligible for consolidation. They contact creditors and work out payment arrangements. Once a budget is established, consumers pay a lump sum payment each month and the credit agency disperses the funds to creditors on the consumer's behalf.

Trade Commission

The Federal Trade Commission is a valuable resource for consumers who need help with debt and credit consolidation. The organization works with consumer protection agencies and other associations to help the public understand commerce and fair credit laws. Further, the commission provides resources for consumers to help themselves improve personal credit and come up with a plan to reduce debt without filing for bankruptcy. Each state has a consumer protection agency with credit education materials similar to the FTC. Consumer protection agencies also provide lists of credit counseling agencies that assist consumers with debt and credit consolidation. Many state-sponsored credit counseling agencies offer services at little or no cost to the consumer.

Bankruptcy

Credit consolidation may not be an option for consumers whose debts do not qualify for various programs. Some consumers may be so deep in debt that filing for bankruptcy is the most reasonable option. Bankruptcy gives consumers relief from troublesome debts. It eliminates personal liability of most consumer debts. Before filing for bankruptcy and before the bankruptcy is discharged, consumers must complete credit counseling from a government approved agency. Pre-bankruptcy counseling includes a financial evaluation as well as a discussion about bankruptcy alternatives. Post-bankruptcy education includes money management and credit resources to help consumers remain in good financial standing.