Knee Deep in Debt? Free Credit and Debt Counseling May be for You

How Credit and Debt Counseling Services Help

Credit and debt counseling is a useful service that provides financial advice when you need it most. Just when you feel like your financial future is at its bleakest, credit and debt counseling can be a beacon of light on the dreary landscape of your financial misfortune.  Counseling is aimed at both making you feel more in control of your financial future, as well as devising a plan to make you pay off your debt more effectively. 

Credit and debt counseling services will step in between you and your creditors. They handle the negotiations with the creditors to try to secure lower payments, and in some cases, they can get the interest rates reduced or even removed while you are represented by the counseling service. Credit and debt counseling will offer people valuable financial advice on an individual basis, because not all debt scenarios are the same.  This is why it's a good idea to work with a counselor that has a  good track record dealing with a number of different types of borrowers. 

Who Can Credit and Debt Counseling Help?

It can be difficult to manage your finances, especially when you're new to managing credit. Consumers with brand new credit can sometimes be overwhelmed with credit card offers. It is not uncommon for new borrowers to take on more than they can handle. In the end, it can get very hard to manage the payments for these cards while still trying to meet your other monthly bill responsibilities. Before you know it, the debt has piled up.  The result is that you default on outstanding debts and collection agencies come calling. 

If you or anyone you know is having a difficult time making ends meet and creditors are harassing for payment, then it may be time to seek some professional financial help. 

Avoid Bankruptcy with Credit Counseling 

If someone is on the verge of declaring bankruptcy, using a credit and debt counseling service may be a viable option before making the leap into bankruptcy.  As bankruptcy can stay on your record for up to ten years, damaging your credit standing, it's important to avoid it whenever possible.   In fact, the new bankruptcy legislation makes it a requirement to contact a credit counseling service before filing.

Not everyone can qualify for credit and debt counseling. There are usually certain criteria that must be met in order to be eligible for counseling. The criteria depends on the agency you choose, as well as the level of your debt problems.

What to Expect from Credit and Debt Counseling

Credit and debt counseling become the middlemen between you and your creditors. All creditor contact will now go through the counseling agency. All the nasty phone calls and derogatory letters from your creditors should cease.

Your credit and debt counseling agency will negotiate a payment system for you. The usual term is a five-year payment plan. Over the course of the five years, you will make a monthly payment to the counseling service. Once your agency and creditors reach agreeable terms, your payments will be issued to the creditors through the agency. Once the five-year plan is up, you should be debt-free!

Where to Get Free Credit and Debt Counseling

Many non-profit credit and debt counseling agencies exist across America. Some of these agencies are free and some charge a small startup fee and monthly service charge. A good website to visit for free credit and debt counseling agencies is www.CCCAmerica.org. However, this website does not offer programs for Connecticut, Maine, Michigan, Montana, New Jersey, New York, Vermont and Virginia.

The Association of Independent Consumer Credit Counseling Agencies also provides a wealth of information at their website, www.AICCCA.org.

Before choosing a credit or debt counseling service, do some research and make sure that they are a reputable agency. There are many fraudulent agencies out there just waiting to take your money via high, unnecessary fees. Stick with the two websites mentioned previously and you will be heading in the right direction.