Life Saving Strategy - Credit Counseling

Financial problems can arise due to many reasons. Like one have had illness in the family and was caught without insurance or the necessary savings to pay mounting bills. Maybe one has lost job and is unable to find employment. When one is desperate and feel there is no place to turn, best way is to seek financial counseling. There are several factors to consider when deciding whether financial counseling is an appropriate course of action or not. This information may also be useful when choosing a counseling agency.

What should one expect?

One might consider counseling when one:

• Is being harassed by bill collectors.
• Have mostly credit card debt.
• Have tried to work out a plan with creditors and failed.
• Have not been able to follow a workable budget.
• Can't keep track of mounting bills.

After first call to the agency, one will probably receive a worksheet to list all monthly income and expenses.

• When one meets with the budget counselor, one will develop a budget plan that meets minimum living expenses and debt repayment requirements. At this point decision should be taken, whether one want to participate in a debt-management plan or whether will use the counselor's suggestions and educational resources to manage debt on own, Self-directed repayment plans J

• If decision is to use a counselor's debt-management plan, one of the first actions should be to get credit cards canceled and return them to the creditor. One must agree not to use or apply for additional credit.

• Based on the budget one worked out with the help of counselor, each month one will send money (by money order, payroll deduction, or automatic check withdrawal rather than a personal check) to the counseling agency. Hence, the agency distributes payments to creditors according to the schedule developed and decided upon.

To be successful, one’s repayment plan must be paid regularly and in a timely way. This plan may be extended for as long as 36 months or until the debt is retired. While one participates in a debt-management program, some creditors may agree to reduce or suspend interest charges.