Credit counseling includes good and bad counselors

Here are a few suggestions for how you can select a credit counselor that will help you, instead of helping themselves. Credit counseling is now required for anyone filing for debt relief, but you want to choose wisely.

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The credit counseling industry was doing rather well in the early part of the decade when the nation's economy was in trouble and many individuals were suffering from financial trouble. The new bankruptcy law, passed enthusiastically by Congressmen, demands that anyone who wishes to file for debt relief must initially apply for credit counseling. Now is a busy, busy time for the credit counseling business. The credit assistance industry has gotten even better since the passage of sweeping bankruptcy reform laws, which went into effect in late 2005.

Once you have $30,000 in charge card debt and a $15,000 salary, you might need some help. Credit counselors can provide help to debtors, and an experienced one can help you manage your financial obligations and give you some help that will keep you from going through such severe problems down the road. A bad counseling agency can make your already bad trouble worse. The strategy to require credit assistance as a prerequisite to bankruptcy is admirable in that many people don't know how to handle money until the debts are too large.
 

Is it possible to tell a responsible counseling agency from a bad one? Here are some good things a credit counselor might suggest:

• Will they discuss a bankruptcy filing? Watch out for any financial professional that suggests that they do not direct anyone to bankruptcy. Bankruptcy is a last resort, to be sure, but sometimes it's necessary.
• Help you establish a tough set of money spending guidelines so that you do not continue to spend more money than you have. Set up a budget.
• Take a look at your options. Can you repay your way out of this situation? Occasionally credit advisors can negotiate with the financial institutions to set up more favorable terms. If you can't afford to pay back, could you do it with a tiny bit of debt restructuring?
• The sources of your debt need to be found. Some causes of money struggles could be a poor business performance, a drug problem, compulsive shopping, or simply spending more money than you have. Looking over your finances for the past few years to see where things went wrong.
• These services take a while, and any financial advisor worth her salt who cares about really helping you will bother to figure out what's best for you.

What are the dubious things?

• A few financial professionals will inform you, after talking with you for no more than a few minutes, that they can help you by enrolling you in their company's debt repayment plan. On occasion, credit advisors don't send payments for you; they simply keep all of it. Debt management plans generally include having you pay a monthly sum to the company, which they, accordingly, forward to your lenders or creditors after deducting their commissions.
• Such companies seem to have no interest in your cash flow or in how your problems began. The agencies only want to set up a payment plan.
• Look out for credit advisors who urge you to quit paying your debts. Refusing to pay your monthly bills may make your lenders somewhat more likely to negotiate your obligations, it will put a big dent in your credit score and you don't want that.

Do your homework. Take your time and try to choose sensibly. A responsible firm can help you reduce trouble, while a shady firm can make your life a nightmare.