How Credit Counseling Can Help You With Your Debt and Finances

I am afraid of debt. Growing up, I saw how my mom struggled with it. (Don't get me wrong, I don't blame her because she really had to work doubly hard to send us all to school.) Being one of the older children, I was often told to bring the payment to her creditors or,  when times get really tough, ask for due date extension. I vowed not to have my child experience that so I'm very careful with my finances.

Photo by Amy Hirschi

But what if, like my mother, getting a loan was your only choice? And what if you're already so deep in debt that your monthly income is only enough to pay your dues so you resort to credit again? Did you know that you can actually ask help from a credit counselor?

What is credit counseling?

Simply put, credit counseling is getting advise on money and debt management. But take note, it's not as simple as it sounds like. Because if it were that simple, then borrowers wouldn't be so stressed out of getting out of debt, right? Credit counselors provide all the assistance and tools that they will need to fix their credit. 

Credit counseling services include, but are not limited to, creating a debt repayment plan, designing a workable budget, negotiating with creditors, and waiving off fees and other charges.

In the US, the Federal Trade Commission (FTC) is the agency that regulates credit counseling agencies. This is also the same agency that protects the rights of debtors make sure that they are not deceived and exhorted by their creditors.

What your credit counselor will do for you

1. Your credit counselor will first evaluate your case. Don't be intimated when he starts to ask for documents showing your monthly income, credit card bill, list of assets, and the like. Without these data, he will not be able to see the bigger picture and develop a strategy fit for you.
2. Your credit counselor will design a Debt Management Plan (DMP) to help reduce credit charges and fees so you can pay your dues more easily.
3. Your credit counselor can apply for a reduction of your credit's interest fees. This is very true especially with credit card companies. My mom was able to pay all her credit card dues after her credit counselor helped her with the interest fees.
4. Your credit counselor can help consolidate your dues into one. This is known as Debt Consolidation. Oftentimes, credit card companies give a discount on fees when credit is consolidated.  This will also be very helpful for you in terms of managing your payments.
5. Your credit counselor can protect you from creditors' harassment. Do you already feel harassed with calls from you credit card company or your bank? Credit counseling will help you deal with them.
6. Your credit counselor can help you apply for new credit or loans. Borrowers with huge debt and arrears get blacklisted by creditors. So they act as your guarantors and negotiate with the banks to help get your application approved. 
7. Your credit counselor will be your financial advisor. Believe me, they are your friends. If you allow them to, you will be able to learn a lot from them on how to maintain your income and manage your future spending. 

Choose only reliable credit counseling agencies

Credit counseling agencies can be for-profit or non-profit and these are legitimate financial institutions. Traditionally, you will be meeting up with your credit counselor in their office. Nowadays, and especially with the global pandemic situation, it is better to avail of online credit counseling. I also appreciate online credit counseling websites because they are less intimidating. Let's admit it, it's so hard to open up to a stranger more so if it's about your financial problems.

One reliable website is debtconsolidation.com. Not only does it offer credit counseling but also has resources, tools, and programs that can help you manage your debt easily.