Debt Counseling Services – When to Ask for Help

With the average American household carrying more than $16,000 in revolving debt, it is no surprise that many people have some anxiety about managing their debt payments each month. Having multiple obligations to lenders each month and accruing interest can make for a serious cash flow problem from paycheck to paycheck. When it all becomes too much, some may think they have no way out of the situation. Considering bankruptcy is a common thought, but there are other tactics to use to help manage an overwhelming debt load. Debt counseling is one of those strategies.

What is a Debt Counselor?

A debt counselor is a professional who can provide valuable help when you are juggling a significant amount of debt. In most cases, a debt counselor offers advice on how to manage your money efficiently each month, including how to pay down debt. They take a close look at your monthly income versus your expenses, and help you develop a workable budget geared toward debt repayment. Your debt counselor may also provide resources that educate you on various types of debt repayment plans, consolidation loans, and how debt impacts your credit.

Once you have connected with a debt counselor, they will walk you through your options for debt management which may include working with creditors. While debt counselors do not typically negotiate amounts owed with creditors, they can help in reducing fees and interest rates on outstanding debts on behalf of the borrower. When these debt repayment plans are put in place, a single monthly payment is made to the counseling service, and they pay the lender or creditor for you. Debt counseling services are offered through a variety of companies, some which are better than others. It is important to review the debt counseling service, including any costs or limitations, before signing up.

Who Should Use Debt Counseling?

If you feel as though you are drowning under the weight of your debt and you are not sure where to turn, debt counseling may be the right solution for you. Because of the personalized advice they offer in terms of budgeting and managing debt payments, debt counselors are often a valuable source of help in desperate times. This type of service can also help you avoid serious issues that will plague your credit, including bankruptcy and default. If you feel you can’t manage your debt repayment alone, letting someone else handle it for you through a debt counselor is a smart choice.

Alternatives to Debt Counseling

You may look to other professionals for money management advice to help with your debt burdens, beyond debt counselors. Some personal financial planners offer this kind of assistance, although they are more focused on helping you find the extra dollars in the budget to help expedite paying off your debt. Most planners work for a fee, so be sure to consider this cost in your decision. Debt settlement may also be an option, which allows a different type of professional to negotiate what you owe, not just interest and fees, with your creditors. Settling debt may have a different impact on your credit score, and it is typically only an option when you are already severely behind on your bills or in collections.

Debt counseling can be a helpful tool in getting you back on track with your debt pay off goals. Be sure to review the debt counselor you choose carefully, ensuring they have a solid track record of success with other clients and customers, and that they are willing and able to put in the effort to help you with your debt needs.

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