Credit counseling is an effective way to get out from under a mountain of
debt. There are two types of debt counseling firms, one is a profit
making company and the other is a not for profit organization. Both offer
the same services, which are advice to creditors and options to resolve pressing
credit situations. The options that they propose may range from making informal
arrangements with creditors to
debt consolidation to recommendations of declaring bankruptcy. All
of these suggestions will be based on the individual case and the depth of the debt
problems.
The important thing in debt counseling
is to be honest and provide all of the necessary
information at the very beginning of the process. There are no secrets in
the credit industry and if you have changed addresses or even names your credit
history is likely to follow you. By being upfront with your debt counselor
they can more quickly bring you closer to a resolution of your credit and
debt problems.
After your initial interview with your credit counselor they will prepare a report
for you that outlines your current credit rating, which is your ability to borrow
and under what conditions and interest rates, and starts the process of laying out
options for you to consider. If it is still possible for you to get additional
credit, or negotiate a
debt consolidation loan from a bank or other lending institution, then they
will help you arrange that. More likely than not the recommendation will be
bankruptcy protection or formal
debt consolidation. If you have absolutely no ability to repay the
monies owed in either the short term or over a long period of time then personal
bankruptcy may be your only option. In that case the debt counselor will help
you get organized for that process.
But most people want to repay their
debts and just need a little more time to do that.
Debt consolidation can help make that happen and it involves a negotiation
process with your creditors so that they will accept something less than full payment
in order to relieve you of your debt to them. Your debt counselor will look
after all of that for you and after a period of months of years you will once again
enjoy a positive credit rating.