Your debt might be too much for you to handle. It's possible that you live from paycheck to paycheck and can't see the light at the end of the tunnel because you can't even keep up with the minimum payments, let alone pay more to get rid of your debt for good.
Why using credit counselling services is a good idea
If you feel like you have no way out financially, you should think about a credit counselling service before filing for bankruptcy. There are many reasons why it's better to use a credit counselling service than to try to solve your money problems on your own. Some benefits are:
Stopping phone calls from creditors who want money
lowering the interest rates on each of your accounts and sometimes even setting them up so that they don't earn any interest at all.
Stopping fees like over-the-limit fees and late fees that are too high
You should feel better because there is a plan of action that will help you pay off your debt.
Questions to Ask Before Joining a Credit Counseling Program
To get help from a credit counselling service, the first step is to choose a service that is actually working to help people. Unfortunately, there are a lot of companies out there that say they are not for profit but charge too much for their services, making them out of reach for people who are already struggling to make ends meet. Do your research first to make sure you are getting help from a real credit counselling programme that is meant to help people with money problems.
Before you sign any contracts or make any other commitments to join the credit counselling programme, you should ask them a few questions, such as:
A request for all of the credit counselling program's services. In an ideal world, a programme would help you set up a budget, teach you how to manage your money, and give you classes to help you get back in charge of your finances. It should also help you set up affordable payment plans with your creditors and pay off your debt.
Ask the agency if their classes or advice cost money. People who use credit counselling services shouldn't have to pay for information and education.
Find out what all the fees are for using their service. Are there fees every month? How much does it cost to set up your account? How much?
Make sure the company offering credit counselling has a licence to work in your state.
Ask about how the credit counsellors got their jobs. Working with people who just work for a credit company won't be as helpful. Instead, you should work with a credit counselling programme that has trained counsellors who know how to get your finances back on track and can teach you how to avoid getting into the same situation again.
Ask how the people who work at a credit counselling agency get paid. If they get paid more when you (the client) buy or sign up for certain parts of the programme, that's a sign that they'll try to get you to sign up for programmes, even if it's not in your best interest, because it makes them more money.
Debt Management Programs
A debt management programme is a part of almost every credit counselling service. You might want to use a debt management programme if a qualified credit counsellor has carefully looked over your finances, including your debts, income, and future plans, and explained the programme to you in great detail. If you decide to use a debt management programme, make sure it's through a credit counselling agency that will also teach you and give you advice.
