Consumer Credit Counseling: Effective Way to Deal with Debt

Although the economy has improved over the past year or so, many people are still dealing with the effects of long-term unemployment and reductions in pay, namely credit card debt and other bills that are difficult to manage. It might be tempting to consider taking out a debt consolidation loan in order to pay off the outstanding bills and make only one payment per month. However, that is just trading one set of debts for another and not doing anything to help you reduce your debt balance. A better option to consider is consumer credit counseling.

Working with your creditors, a credit counselor will reduce both interest rates and monthly payments, as well as get certain late fees and other charges waived. They then set up a monthly payment schedule with your creditors. You make one payment each month to the credit counselor, who disburses that money to your creditors according to the approved schedule. With this plan, you can have your debt paid off much sooner, saving you thousands of dollars in interest charges.

Consumer credit counseling offers a number of benefits that debt consolidation loans or debt settlement plans do not. These include:

  • Working with your creditors to create an affordable payment plan
  • Eliminating collection calls that often come at inconvenient times
  • Working with a trustworthy counselor who will handle your payment plan as arranged
  • Money management counseling in order to avoid future problems

Credit counselors typically work only with unsecured debt, such as credit cards. They can also help you with settling outstanding medical bills, student loans and other bills turned over for collection. Most counselors offer a free no-obligation consultation where they will review your situation with you and let you know what they can do to help. While they do not themselves make loans or offer legal advice, they may be able to refer you to someone who specializes in those fields if it is appropriate.

Consumer credit counseling can be an effective way to bring your unsecured debt payments under control. It is also a great way to learn how to manage your finances in order to avoid debt problems in the future. While it may seem impossible today, a credit counselor can help you create a path toward being debt free in just a few years and back on the road to a solid financial future.

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