Know Your Options Before Addressing Financial Problems

Your financial difficulties could already be severe enough that you are tempted to accept the first solution that comes along. However, there are pros and cons to bankruptcy, debt consolidation, debt settlement and most debt repayment options. It is important to talk to someone who knows the ins and outs of the credit industry and can offer educated recommendations on how to get out of debt. Debt problems typically do not materialize overnight. Nor do they go away quickly. Many people have benefited from having a credit counselor guide them through their debt repayment options.

For those worried that talking with a credit counselor will add another bill, most counseling and education services are offered for free. If you decide a debt management plan is best for you, then there is a small fee to set up and minimal monthly maintenance fees. This is good news for you not just because you save money, but because it ensures that your counselor is actually working in your best interest.

The most effective credit counselors are those whose chief priority is helping you reach the credit and debt goals most important to you. That means they won’t steer you toward paying for a financial product primarily because it generates money for their company. They also won’t take payments from you for a scheme that ultimately damages your credit and quite possibly doesn't provide any financial relief. A credit counselor will take your information —income, assets, liabilities and expenses — to help you come up with an action plan to get out of debt, monitor your credit and improve your overall financial situation.

Talking to credit counselor can help you understand the differences between debt management, debt consolidation and debt settlement and the pluses and minuses of each. You will also be able to discuss whether to set money aside for savings while you pay down debt and how much. And if it turns out that you decide bankruptcy is your best option, a credit counselor will help you in some of the initial steps and can work with you post-bankruptcy to come up with a plan to start rebuilding your credit.

If you are in a position where you’re struggling with bills and debt, even to the point of seeing no viable way out, you still have time to talk with a credit counselor. You may decide to go the direction you’re thinking of now, but you’ll be armed with solid, trustworthy information.
 

Published Dec 12, 2013.