Becoming Debt Free Through Credit Counseling

Many people need help in managing debt due to unexpected hardships such as lay-offs and illnesses. Others just buy too much with their credit cards and need to get out of debt. The combination of high interest rates with steep over-the-limit and late fees can increase your balances until they're out of control.

You may be embarrassed to talk about debt, but the quicker you handle it the better chance you have of reestablishing your credit. Like most people, you might be uncomfortable about approaching credit-counseling services.

A credit counseling service is just one of the options you have to get out of debt. Handling it on your own, consolidation loans, or bankruptcy are the other three that are most commonly seen. None of the options are perfect, but you can choose the one that's best for you based on how much you owe, your level of self-discipline, and your future financial prospects.

Know Your Rights When Considering Credit Counseling

You have specific rights when you use a credit counseling agency in the United States. The National Foundation for Credit Counseling client's bill of rights states that counseling would serve all members of a community without regard to social class, economic status, sex, or ethnic, racial, or religious affiliation.

This bill of rights pledges confidentiality, prompt counseling services, and treatment with dignity and respect. You also have the right to have any complaints resolved promptly and to discontinue your relationship with the agency at any time.

Gathering Information for Credit Counseling

When choosing a credit counseling agency, use the Better Business Bureau ratings and ask your creditors who they recommend (they know which ones pay on time). You can also ask family members or friends you are comfortable talking with to recommend an agency they use and are happy with.

Once you have chosen a credit counseling service, you usually have several options. You can set up a face-to-face appointment, enter the information online, or complete a counseling session on the phone. Either way, you need to gather information about the people and companies you owe money to.

If you have your most recent credit statements, that's all you need. Those bills have all the information the counseling service will ask for. If your statements are over 90 days old, you need to call your creditors and get updated balances. If you aren't sure who you owe money to or what the balances are, you'll need to get a copy of your credit report in order to have all of the information necessary for credit counseling.

Credit Counseling Sources

National Foundation for Credit Counseling. "Accreditation and Standards of Excellence." NFCC.