As soon as you become aware that you are in trouble with your credit card bills, due to late payments or inability to make your minimum payments, it is important to seek out the help of a debt counselor. Do this before you have collectors knocking down your door looking for their money.
Credit counseling may give you some ideas as to how to manage the debt. It may also bring in some financial discipline in your life. However, not all credit counselors are above board. It is important to choose the right counseling service.
Among other things, you should be careful of organizations that charge you more than the usual $10 up-front fee. You should certainly steer clear of services that offer to settle your debts at little or no money, because such services are most definitely illegitimate.
A good idea is to confirm whether the firm is registered with either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agency;
You should also ensure that the payments made to the credit counseling firm are transferred to your creditors on time. Late or missing payments reflect badly on your credit rating, and if this becomes a regular practice you are better off without the services of such an unethical institution
It has long been known that credit counseling has its pros and cons. While such counseling may enable you to get control of your debt problems, it will destroy your credibility with future creditors. Even though you may have a little trouble getting creditors to loan you money in the future, many feel that the pros, such as getting control of your debt, outweigh the cons. Once your debt is resolved you should be able to once again get a loan.
It is important for you to do your research properly and opt for a service that does not further deteriorate your credit rating. For instance a company that tags you as a credit delinquent should be avoided, while one that merely informs your creditors about your decision to take up credit counseling is a better option.
As a general rule, credit counseling is very beneficial. It does have its limitations, though. If you a extremely deep in debt and bankruptcy seems imminent, they may be unable to help to you. Also, unless you learn to exercise some financial discipline and reduce your spending, credit counselors will be unable to help you.