You have various options for help when you sink too deeply into debt, including credit counseling services. Your required level of assistance depends on how much you owe, how late you are on your payments and whether you have available funds to make payments. A legitimate credit counselor helps you assess your situation and make the best debt management choice.
Definition
Credit counseling means working with a professional who assesses your financial situation and discusses your options with you. Typical options, explains the Federal Trade Commission (FTC), are creating a budget, attending financial management training or entering into a formal debt management plan administered by the counseling firm. The counselor may even recommend bankruptcy if your situation is not salvageable in any other way.
Finding Help
Many credit counseling websites have educational materials you can use on your own, without engaging a counselor's personal services. The FTC website explains that legitimate counseling companies also have classes to teach you self-help skills if you prefer to work on your own. Counselors work through personal sessions, online chats or on the phone if you need to speak with someone. Find local firms through professional organizations like the National Foundation for Credit Counseling and Association of Independent Consumer Credit Counseling Agencies.
Warning
Not all credit counseling services are on the level, even if they advertise nonprofit status. The Better Business Bureau warns that some charge extremely high fees that are not properly disclosed up front or pressure you into a debt management program even if that is not the best solution for you. Ask the firm if it is licensed, if its counselors are independently trained and certified, and if it discloses its fees in writing and provides written contracts to clients.
Alternatives
You have various options for debt management in addition to credit counseling, such as self-help or working with your creditors. A strict budget may allow you to catch up and pay off your bills if your payments are not too delinquent. Otherwise, call your credit card companies and other creditors to see if they are willing to work with you. They may be able to move your due dates, forgive interest and penalties or even settle with you for less than the full amount owed on some bills. Bankruptcy is sometimes necessary if you cannot catch up on your own or with counseling, although the FTC website explains that federal law mandates pre- and post-bankruptcy counseling through a government-approved provider.
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