Michael J. Logan, Ltd.

Understanding credit counseling

If you have ever heard of credit counseling, the name might give you some indication what is involved, but you might not fully understand what credit counseling means. Though definitions can vary between providers, it is generally a service that coaches debtors in methods of managing and reducing their debt. By partnering with a counselor, you may be able to tackle some of the financial challenges you are facing. Here are four benefits that can help you better understand what credit counseling is all about.

Credit counseling may be free

There are many nonprofit agencies that provide credit counseling to consumers in need of assistance with debt management. The National Foundation for Credit Counseling can help you find a certified counselor to provide professional guidance and advice at no cost. You should be wary of counseling agencies that intend to charge fees or bill you for the time you spend with a counselor. There are providers who offer these services for free.

Debt settlement and credit counseling are different

Many debt settlement agencies and other financial service providers offer their services under the guise of credit counseling, when in fact they are entirely different. Debt settlement often requires participants to pay fees, and in some cases, it is an outright scam. If you encounter a supposed credit counselor who makes promises that seem too good to be true or who requests payment for services, be cautious.

You should familiarize yourself with your finances

Debt counselors will want to understand your motivation for seeking their services, and they will also need to be familiar with the intricacies of your financial situation. In order to best communicate with them, you should first familiarize yourself with all of the debts you owe, any current payment arrangements and all of your current expenses. This will help them more accurately develop a plan for organizing your finances.

Credit counseling is a long-term resolution

If you are looking for a quick fix, credit counseling is not for you. It typically entails the development of repayment plans and payment arrangements with debtors. This can take years to complete, but it can be a very effective way of regaining control over your finances in the long term. If you want to see a real resolution to your debt problems, partnering with a debt counselor may be the first step.

There are many ways to address debt, including some legal options. A lawyer can help you better understand what legal recourse is available in handling debt.

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