Demand for debt counselling is at an all-time high. The Fed has raised interest rates for 17 straight quarters, home prices are going down (which makes it harder to get a debt consolidation loan), tuition costs are going up, gas prices are going up, and bankruptcy reform is just one more thing that is pushing people into debt counselling programmes. But what are your choices, and which programme should you choose? Continue.
First, here are some shocking facts: people have more than $13 trillion in debt, and more than $2 trillion of that debt is revolving. When interest rates go up, people who have revolving debt have to pay more. For example, it is thought that over $2 trillion of mortgage debt with adjustable rates (called "ARMs" or "Adjustable Rate Mortgages") will change over the next two years, adding over $50 billion to the interest costs of American consumers. What does it mean? It could mean that you can't pay your bills, and for many people, that means their credit card debt payments are too high to pay, which means they need debt counselling.
Debt counselling could mean a lot of different things, from a traditional debt management plan that lowers interest rates and monthly payments to a more aggressive negotiated debt settlement programme that goes after both the principal and the interest. Make sure you sit down and do a budget analysis (http://www.bills.com/guide) and look at your monthly budget. The first thing you should do when thinking about debt counselling is to figure out how much you can put toward paying off your debts. If you can pay more than 2.5% of the total amount of your debt each month, credit counselling may be the best way to deal with your debt. If you can only pay 1.5 percent of your total debt each month, you should talk to a debt settlement or debt negotiation company for help. If you can't afford to make any payments, you might want to think about bankruptcy as well as debt counselling.
The next step in choosing a debt counselling programme is to decide whether your savings or your credit score is more important to you. If you just want to save the most money and get out of debt as quickly as possible, debt settlement might be the best option. If you want to buy a house in the next year or two and your credit score is the most important thing to you, you won't want to fall behind on your bills. Instead, you might want to look into a debt consolidation loan or credit counselling.
Before signing up for a debt counselling programme, it's important to remember that there is no one-size-fits-all solution. Look around to find the best programme and a company that is honest and has a good Better Business Bureau rating.
