Counseling for Debt

When overwhelmed with payment one is unable to meet, a debtor is usually left with two choices – debt consolidation or bankruptcy. This situation is increasingly common in these days of economic uncertainty and job losses. Credit counseling has risen to the occasion and has become a popular alternative to bankruptcy. More and more counseling agencies are opening shop to aid individuals to better manage their finances and keep collection agencies at bay. Such counseling agencies are essentially non-profit but are allowed to charge a nominal fee to cover administrative costs.

A classic counseling position is one where an individual is unable to meet his or her financial commitments with income alone. Some creditors might already have initiated recovery proceedings or alternate legal action. Declaring bankruptcy seems the only alternative, but such an action will impact the person’s credit record for the next 7 to 10 years.

In such an instance, a non-profit counseling service could come up with a more palatable alternative. A debtor could furnish full details of all dues and undertake some debt counseling. The counselor will consolidate all the outstanding balances and calculate a single payment which will be offered to all the separate creditors. More often than not, creditors are happy with such an arrangement rather than meet the costs of legal proceedings.