Bankruptcy can be a scary option, but if you’re in debt you may feel like you have no other choice. The truth is that you don’t need to be scared because there are other things you can do besides declare bankruptcy. There are lots of ways to avoid bankruptcy. In fact, bankruptcy is actually becoming harder to declare; so it may not even be a choice for you. If you’re in financial crisis, particularly due to credit card debt; there are other options, and there are people willing to help. One of these options is credit counseling. These agencies can help you pay off your debt and stop harassment from credit card companies.
A credit counselor is a person who helps work with your creditors to lower your interest rates. Credit card companies will work with these agencies because it’s better for them to work this way and get paid smaller amounts of money than to have you stop paying your bill and get no money at all. A credit counselor will work with you to figure out a plan to pay off your debt that’s tailored to your specific needs. You will pay one monthly bill to the credit counseling agency and they will pay your debt for you. Besides offering you a way out of debt, a credit counselor can also act as a sympathetic knowledgeable ear to ask your questions and express your concern.
You should not think of credit counselors as a cure-all for your money troubles. You still have to pay off your debt; they simply make it more manageable. Plus, going to a credit counselor goes on your credit report and still significantly affects your credit report. The affect of credit counseling is about the same as declaring Chapter 13 bankruptcy (redistribution of debt), but not nearly as bad as declaring chapter 7 bankruptcy (total liquidation of assets). It does keep you out of court though. Another downside of credit counseling is that you generally have to give up all your credit cards so you can concentrate solely on paying off debt.
When you decide that credit counseling is the route you want to take, you should be sure to find a reputable agency that is going to work in your best interest. Sadly, there are lots of companies out there that are perfectly willing to take advantage of your situation if you’ll let them. You first step is to find an agency that is not-for profit. Most large agencies are; however, some are non-profit branches of a for-profit company. It’s best to research the company you’re going to work with first to make sure this isn’t the case. Plus, even if a company is a legitimate not-for profit, that doesn’t mean they have your best interest in mind. If a company offers a quick fix if you pay an upfront fee or guarantees you help before knowing your financial situation, keep looking. Legitimate credit counselors offer their services at very low rates, many times less than 20 dollars a month, and they will never ask for money before services are rendered. If you’re having trouble finding a credit counseling agency you think is legit or just want help finding one, you can always check with the Better Business Bureau. They can give you a list of reputable credit counselors that you can work with.
What you need to remember is that while there’s no quick fix to being in debt, there are people out there who are willing and able to help you; you just have to ask.
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