Do You Really Need Credit Counseling?

Being swamped in debt can really bring stress and emotional pain, and sometimes the best way to get through this situation is to seek credit counseling. A credit counseling agency can be a big help for people who are losing control over their finances. What can this service do for you?

A credit counselor can negotiate with your creditors for easier repayment terms or reduced monthly payment fees. In some instances, a counselor may suggest that the client enroll in a debt repayment plan.

Debt Repayment Plan and Counseling
What is a debt repayment plan? A debt repayment plan is when the credit counseling agency distributes the client's monthly payments to the creditors along with negotiation. As a borrower, you will be submitting your repayments to your agency and the agency would be the one to pay off your creditors.

Under a debt repayment plan, debts with the highest interest rates are often paid off first to keep debts from further building up. However, bear in mind that enrolling in a debt repayment plan or debt management plan is not always applicable for everyone. Do you really need a credit counseling agency to do this? Would it be better to do repayment on your own?

Why Seek Credit Counseling
Carefully study your financial situation and weigh your options. What has led you to debt? Are you having difficulty controlling your spending habits? If the problem involves your personal spending habits, it may be a good idea to seek professional help from a counselor.

You'll know it's best to seek help from a legitimate and trusted credit counseling agency when:

* debt problems are starting to interfere with your family relationships
* lenders are denying you credit
* calls from your creditors are starting to upset you
* you find it hard to take control of the situation.

Once you have decided to obtain credit counseling services, see to it that you'll be working with a legitimate and trusted agency. Some credit services could be fake. Even so-called non-profit agencies could take advantage of your problem if you're not careful with your choice.

One way to check the reputation of a agency is to see if it's a member of the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA).

You may also check from the Better Business Bureau and from your State Attorney General's office if there has been any cases filed against the company and how these issues were resolved.

Once you're sure that the agency is a legitimate one, know as much as you can about the services the agency provides. Inquire about the fees that you will be required to pay, what programs are offered, and what certifications the agency have.

Remember that an agency should not ask you to submit payment unless the services have already been provided.