Credit Counseling

The second variation of debt consolidation is not really consolidation as described on the debt choices page, but something entirely different. With Consumer Credit Counseling Programs, you meet with a counselor who analyzes your budget and salary in order to come up with a plan. Then, the counselor contacts your creditors and attempts to get temporary interest rate reductions. You make one monthly payment, and funds are then disbursed to various creditors.

Truth About Credit Counseling

The basic truth is, almost everyone qualifies for Credit Counseling. The financial press tout credit counseling as a superb way to help consumers get out of debt. And Debt Consolidation Advisors does offer this service to certain clients. But it is by no means our key focus.

Credit Counseling effectively restructures your debt, which means if you are not suffering from financial troubles, and your debt has simply become difficult to manage, it is a smart alternative. The education component will enable you to gain more financial discipline, and if you are sure any financial difficulties you're having are short-term, the management factor will definitely help you get control of your debts. Plus, it will stop the phone from ringing, which is a key benefit for anyone!

So, if you're having temporary troubles, and the banks are beginning to call, credit counseling may work for you.

The final form of what is often referred to debt consolidation or "debt relief" is essentially Chapter 13 bankruptcy. Be warned that many ads you may see for "debt relief" are often from law firms who will take you through the bankruptcy process. Watch out for these! They are extremely damaging to your credit.

Read on to find out why bankruptcy can be very damaging.