Credit Counseling

The news on the US economy seems to be getting better, including a recently reported increase in jobs.  But many consumers are still feeling very pinched.  Managing expenses, tracking spending and keeping debt under control remain critical focus areas for many Americans.  This is evident in the increased popularity of layaway and other expense management mechanisms.

For many, turning to a credit counselor is a sensible step (and it’s now a requirement before you can file for bankruptcy in the US).

Credit counselors can work with you to make sense of your financial picture.  They can get you smart about your money, help you manage your debt, and help you develop a budget.  The outcome is usually a personalized plan based specifically on your financial situation.  They can also help you decide if it’s appropriate to use a  debt management plan (basically, you make deposits with the counselor and they pay your bills after working out a schedule with our creditors).

There are a lot of great credit counselors out there, but there are always a few bad apples in any bunch.  So as with any service provider, it is important to do your research.

If you don’t know where to begin, you can start with the US Federal Trade Commission, which offers resources for anyone who needs help to find a credit counselor (as well as resources for anyone looking more generally for guidance on managing debt).  The US Department of Justice also offers a database of credit counseling agencies, but of course, the DOJ doesn’t recommend any particular agency.

Ask questions and make sure you’re satisfied with the answers.  Understand what services they offer and, importantly, how much they charge for those services.  Be sure to do the math — if they can help you put together a debt management plan that results in lower monthly payments in the short-term, make sure that the long-term costs haven’t gone up.