Credit Counseling and Consumer Credit Counseling

When should you consider credit counseling?

There's no magic "line in the sand" to tell you when it's time to seek credit counseling.  You could be in debt for as little as $6,000 and require detailed and invasive assistance.  Conversely, you could owe tens of thousands of dollars and be fully capable of managing the repayment process on your own.

That said, ask yourself the following:

• Are utterly overwhelmed?
• Are you time strapped?
• Are you facing lawsuits and/or threats from collection agencies?

If you answered yes to any or all of these questions, it may be time to reach out to a qualified third party.

What's the best way to connect with a legitimate credit counseling agency?

Personal referrals from trusted friends, family members, and professionals in your network can be very useful.  Both for-profit and not-for-profit agencies abound, and you can also find recommendations via the Internet, the Yellow Pages, TV, radio, etc.

How should you vet credit debt negotiators?

Most legitimate agencies provide free consultations. Before you meet your candidates, do your research. (The Better Business Bureau tracks consumer complaints filed against creditor counselors.)  Come prepared with questions.  For instance:

• Will the agency or counselor provide customized or prepackaged solutions?  (Customized help is much better: prepackaged plants won't address your unique and complicated cash flow problems.) 
• When the agency sends out status updates on creditor accounts, how does that information get communicated? 
• If a creditor escalates actions against you (e.g. instigates a lawsuit), what actions will the counselor take on your behalf? 
• What's the counselor's conservative estimate for how long it will take you to climb out of debt based on your current income projections?

Note: there are no quick fixes to massive debt collection problems.  A counselor who promises fast solutions may not be speaking with you on the level.  Remember the tale of The Tortoise and The Hare.  Debt settlement necessitates sacrifices, and rehab can be long and painful.  But if you're backed by a sound plan and supported by a respected agency, you can dig your way out of debt and reach solid financial footing.