A Guide To Consumer Debt Counseling

Consumer debt counseling refers to using a credit counseling agency in order to get assistance with your debt problems and to get your financial life under control. Some credit counseling agencies are not-for-profit and accredited by various associations of credit counselors. In addition, some credit counseling agencies have been approved by the government. If you intend to file bankruptcy, you will need to undergo credit counseling with an approved credit counselor before you can file. If you hope to stave off bankruptcy, consumer debt counseling can be a way to do it. However, there are also some unethical debt counseling services out there, and if you get involved with one of those, you could find yourself in an even worse financial position, so it pays to be very careful. 

Working with a Consumer Debt Counseling Service

Consumer debt counseling services can do a number of different things, depending on the state of your finances and the type of help you need. Most consumer debt counseling services:

• Offer financial counseling and education. This may be required, especially if you are undergoing debt counseling as part of a bankruptcy filing. Most accredited and ethical debt counseling services offer some type of classes that are designed to help you get your finances under control so you won't get into further debt problems
• Offer debt negotiation services. Debt negotiation involves speaking with the creditors to whom you owe money and arranging a settlement. In debt settlement, the debtor makes a commitment to pay back the debt- usually in a lump sum, but occasionally in a payment plan. In exchange for the payment, the credit card company agrees to accept less than the total balance that is owed. For example, if you have a $1000 overdue balance you haven't been paying on a card, the credit card company may work out an agreement with the debt settlement firm to allow you to make a lump sum payment of $500. This way, they'll definitely get some money- which they might not, if you declared bankruptcy
• Provide you with advice on what you can do about your debt. If debt settlement won't work for you, the credit counseling service may be able to offer you alternate options, such as debt consolidation. 

Getting Legal Help

While debt counseling or credit counseling firms can be useful and can help some consumers, it may also be worth looking into the services of a debt consolidation attorney. Debt consolidation attorneys provide many of the same services as consumer debt counselors, however they are bound by a legal code of ethics so you don't need to ever worry about getting scammed.