Professional Debt Help

Debt feels overwhelming when you get in so deep that you are missing payments and creditors are hounding you, but you do not have to handle it alone. A variety of professionals, from credit counselors to attorneys, offer various forms of assistance. Most of these professionals are on the level, but the Better Business Bureau (BBB) warns that there are also some scammers.

Credit Counseling

Professional credit counseling companies offer a wide array of services to help you get out of debt. The Federal Trade Commission (FTC) website advises that legitimate counseling firms provide free educational materials. Some also give financial classes. One-on-one counseling is the mainstay of these firms. You set up an appointment to speak with a professional counselor in an office, on the phone or through an on-line chat session. The counselor evaluates your situation and makes suggestions that might range from better budgeting to a formal repayment plan to filing for bankruptcy, depending on your fiscal condition. Many firms are non-profit, but the FTC warns this does not guarantee legitimacy. Ask for a full up-front disclosure of fees before working with a credit counselor. The National Foundation for Credit Counseling is a professional organization with a searchable database of counselors.

Debt Management Plans

Professional debt management plans help you if you cannot manage a strict budget on your own. These plans are developed by a credit counselor who works with your creditors to reduce or eliminate certain fees and interest charges and sets up a payment schedule. Your monthly payment goes to the counseling firm, which distributes it to the appropriate accounts. The FTC advises that plans run for 48 months or more, but your bills are wiped out if you complete the process successfully.

Debt Negotiation

Debt negotiation companies offer professional help for lowering your bills by working with your creditors on your behalf. They charge up-front fees, and the Better BBB warns that many take the money and never call your lenders. Some firms hurt your credit rating by advising you to stop payments to give them more leverage or by negotiating settlements that appear on your credit reports. Debt elimination firms advertise that they can wipe out your debts completely, but the BBB advises that their methods are ineffective.

Bankruptcy

You can file bankruptcy on your own, but a legal professional helps you through the process of selecting the best type for your personal situation and dealing with the court. Chapter 7 bankruptcy forces sell-off of most of your assets and absolves you of most debts, according to the FTC, while Chapter 13 makes you repay some money and lets you keep certain things. The law requires you to get professional counseling before your bankruptcy and debt management training afterward through an approved company. The U. S. Department of Justice maintains a database of approved professionals from which to select.